Correlation Between GLG LIFE and NetSol Technologies
Can any of the company-specific risk be diversified away by investing in both GLG LIFE and NetSol Technologies 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 GLG LIFE and NetSol Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLG LIFE TECH and NetSol Technologies, you can compare the effects of market volatilities on GLG LIFE and NetSol Technologies 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 GLG LIFE with a short position of NetSol Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and NetSol Technologies.
Diversification Opportunities for GLG LIFE and NetSol Technologies
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GLG and NetSol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with NetSol Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetSol Technologies has no effect on the direction of GLG LIFE i.e., GLG LIFE and NetSol Technologies go up and down completely randomly.
Pair Corralation between GLG LIFE and NetSol Technologies
Assuming the 90 days trading horizon GLG LIFE TECH is expected to generate 16.63 times more return on investment than NetSol Technologies. However, GLG LIFE is 16.63 times more volatile than NetSol Technologies. It trades about 0.06 of its potential returns per unit of risk. NetSol Technologies is currently generating about 0.03 per unit of risk. If you would invest 2.35 in GLG LIFE TECH on August 29, 2024 and sell it today you would lose (0.35) from holding GLG LIFE TECH or give up 14.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GLG LIFE TECH vs. NetSol Technologies
Performance |
| Timeline |
| GLG LIFE TECH |
| NetSol Technologies |
GLG LIFE and NetSol Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLG LIFE and NetSol Technologies
The main advantage of trading using opposite GLG LIFE and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, NetSol Technologies 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 NetSol Technologies will offset losses from the drop in NetSol Technologies' long position.| GLG LIFE vs. MAGIC SOFTWARE ENTR | GLG LIFE vs. Harmony Gold Mining | GLG LIFE vs. Columbia Sportswear | GLG LIFE vs. MCEWEN MINING INC |
| NetSol Technologies vs. Ross Stores | NetSol Technologies vs. CHEMICAL INDUSTRIES | NetSol Technologies vs. Mitsubishi Gas Chemical | NetSol Technologies vs. Siamgas And Petrochemicals |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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