Correlation Between Net Insight and New Wave
Can any of the company-specific risk be diversified away by investing in both Net Insight and New Wave 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 Net Insight and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Net Insight AB and New Wave Group, you can compare the effects of market volatilities on Net Insight and New Wave 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 Net Insight with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Net Insight and New Wave.
Diversification Opportunities for Net Insight and New Wave
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Net and New is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Net Insight AB and New Wave Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Group and Net Insight 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 Net Insight AB are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Group has no effect on the direction of Net Insight i.e., Net Insight and New Wave go up and down completely randomly.
Pair Corralation between Net Insight and New Wave
Assuming the 90 days trading horizon Net Insight AB is expected to generate 1.24 times more return on investment than New Wave. However, Net Insight is 1.24 times more volatile than New Wave Group. It trades about 0.06 of its potential returns per unit of risk. New Wave Group is currently generating about 0.03 per unit of risk. If you would invest 521.00 in Net Insight AB on September 3, 2024 and sell it today you would earn a total of 205.00 from holding Net Insight AB or generate 39.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Net Insight AB vs. New Wave Group
Performance |
| Timeline |
| Net Insight AB |
| New Wave Group |
Net Insight and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Net Insight and New Wave
The main advantage of trading using opposite Net Insight and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Net Insight position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave's long position.| Net Insight vs. New Wave Group | Net Insight vs. Cantargia AB | Net Insight vs. Enea AB | Net Insight vs. Proact IT Group |
| New Wave vs. Hexatronic Group AB | New Wave vs. Inwido AB | New Wave vs. Lindab International AB | New Wave vs. Byggmax Group AB |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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