Correlation Between Newmark and Adler Group

Can any of the company-specific risk be diversified away by investing in both Newmark and Adler Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Newmark and Adler Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newmark Group and Adler Group SA, you can compare the effects of market volatilities on Newmark and Adler Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Newmark with a short position of Adler Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmark and Adler Group.

Diversification Opportunities for Newmark and Adler Group

0.0

Correlation Coefficient

Newmark  Adler Group

Pay attention - limited upside

The 3 months correlation between Newmark and Adler is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Newmark Group and Adler Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adler Group SA and Newmark is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Newmark Group are associated (or correlated) with Adler Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adler Group SA has no effect on the direction of Newmark i.e., Newmark and Adler Group go up and down completely randomly.

Pair Corralation between Newmark and Adler Group

Given the investment horizon of 90 days Newmark Group is expected to generate 0.73 times more return on investment than Adler Group. However, Newmark Group is 1.37 times less risky than Adler Group. It trades about 0.06 of its potential returns per unit of risk. Adler Group SA is currently generating about -0.07 per unit of risk. If you would invest  852.00  in Newmark Group on August 2, 2024 and sell it today you would earn a total of  652.00  from holding Newmark Group or generate 76.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Newmark Group  vs.  Adler Group SA

Newmark Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmark Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Newmark disclosed solid returns over the last few months and may actually be approaching a breakup point.

Adler Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adler Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adler Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Newmark and Adler Group

The main advantage of trading using opposite Newmark and Adler Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmark position performs unexpectedly, Adler Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Adler Group will offset losses from the drop in Adler Group's long position.

The idea behind Newmark Group and Adler Group SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.