Correlation Between Eldorado Gold and NetSol Technologies
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold 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 Eldorado Gold and NetSol Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eldorado Gold Corp and NetSol Technologies, you can compare the effects of market volatilities on Eldorado Gold 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 Eldorado Gold with a short position of NetSol Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and NetSol Technologies.
Diversification Opportunities for Eldorado Gold and NetSol Technologies
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eldorado and NetSol is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and Eldorado Gold 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 Eldorado Gold Corp 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 Eldorado Gold i.e., Eldorado Gold and NetSol Technologies go up and down completely randomly.
Pair Corralation between Eldorado Gold and NetSol Technologies
Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.76 times more return on investment than NetSol Technologies. However, Eldorado Gold Corp is 1.32 times less risky than NetSol Technologies. It trades about 0.07 of its potential returns per unit of risk. NetSol Technologies is currently generating about 0.01 per unit of risk. If you would invest 804.00 in Eldorado Gold Corp on August 26, 2024 and sell it today you would earn a total of 862.00 from holding Eldorado Gold Corp or generate 107.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. NetSol Technologies
Performance |
| Timeline |
| Eldorado Gold Corp |
| NetSol Technologies |
Eldorado Gold and NetSol Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and NetSol Technologies
The main advantage of trading using opposite Eldorado Gold and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold 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.The idea behind Eldorado Gold Corp and NetSol Technologies 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.| NetSol Technologies vs. MIND CTI | NetSol Technologies vs. PDF Solutions | NetSol Technologies vs. Research Solutions | NetSol Technologies vs. Red Violet |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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