Correlation Between Niagara Mohawk and NetSol Technologies
Can any of the company-specific risk be diversified away by investing in both Niagara Mohawk 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 Niagara Mohawk and NetSol Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Niagara Mohawk Power and NetSol Technologies, you can compare the effects of market volatilities on Niagara Mohawk 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 Niagara Mohawk with a short position of NetSol Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niagara Mohawk and NetSol Technologies.
Diversification Opportunities for Niagara Mohawk and NetSol Technologies
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Niagara and NetSol is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Niagara Mohawk Power and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and Niagara Mohawk 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 Niagara Mohawk Power 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 Niagara Mohawk i.e., Niagara Mohawk and NetSol Technologies go up and down completely randomly.
Pair Corralation between Niagara Mohawk and NetSol Technologies
Assuming the 90 days horizon Niagara Mohawk is expected to generate 1.51 times less return on investment than NetSol Technologies. But when comparing it to its historical volatility, Niagara Mohawk Power is 2.36 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 0.04 of returns per unit of risk over similar time horizon. If you would invest 220.00 in NetSol Technologies on August 25, 2024 and sell it today you would earn a total of 48.00 from holding NetSol Technologies or generate 21.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 63.76% |
Values | Daily Returns |
Niagara Mohawk Power vs. NetSol Technologies
Performance |
Timeline |
Niagara Mohawk Power |
NetSol Technologies |
Niagara Mohawk and NetSol Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Niagara Mohawk and NetSol Technologies
The main advantage of trading using opposite Niagara Mohawk and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niagara Mohawk 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.Niagara Mohawk vs. NetSol Technologies | Niagara Mohawk vs. Mill City Ventures | Niagara Mohawk vs. Kaltura | Niagara Mohawk vs. Arrow Financial |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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