Correlation Between US Global and NetEase
Can any of the company-specific risk be diversified away by investing in both US Global and NetEase 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 US Global and NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Investors and NetEase, you can compare the effects of market volatilities on US Global and NetEase 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 US Global with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and NetEase.
Diversification Opportunities for US Global and NetEase
Good diversification
The 3 months correlation between GROW and NetEase is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and US Global 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 US Global Investors are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of US Global i.e., US Global and NetEase go up and down completely randomly.
Pair Corralation between US Global and NetEase
Given the investment horizon of 90 days US Global Investors is expected to under-perform the NetEase. But the stock apears to be less risky and, when comparing its historical volatility, US Global Investors is 1.5 times less risky than NetEase. The stock trades about 0.0 of its potential returns per unit of risk. The NetEase is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,672 in NetEase on September 2, 2024 and sell it today you would earn a total of 2,076 from holding NetEase or generate 31.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Global Investors vs. NetEase
Performance |
| Timeline |
| US Global Investors |
| NetEase |
US Global and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and NetEase
The main advantage of trading using opposite US Global and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.| US Global vs. Gladstone Investment | US Global vs. PennantPark Floating Rate | US Global vs. Horizon Technology Finance | US Global vs. Stellus Capital Investment |
| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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