Correlation Between NetEase and Eastgate Biotech
Can any of the company-specific risk be diversified away by investing in both NetEase and Eastgate Biotech 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 NetEase and Eastgate Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and Eastgate Biotech Corp, you can compare the effects of market volatilities on NetEase and Eastgate Biotech 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 NetEase with a short position of Eastgate Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and Eastgate Biotech.
Diversification Opportunities for NetEase and Eastgate Biotech
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NetEase and Eastgate is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and Eastgate Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastgate Biotech Corp and NetEase 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 NetEase are associated (or correlated) with Eastgate Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastgate Biotech Corp has no effect on the direction of NetEase i.e., NetEase and Eastgate Biotech go up and down completely randomly.
Pair Corralation between NetEase and Eastgate Biotech
Given the investment horizon of 90 days NetEase is expected to under-perform the Eastgate Biotech. But the stock apears to be less risky and, when comparing its historical volatility, NetEase is 60.03 times less risky than Eastgate Biotech. The stock trades about -0.01 of its potential returns per unit of risk. The Eastgate Biotech Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Eastgate Biotech Corp on September 14, 2024 and sell it today you would lose (0.55) from holding Eastgate Biotech Corp or give up 55.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.29% |
| Values | Daily Returns |
NetEase vs. Eastgate Biotech Corp
Performance |
| Timeline |
| NetEase |
| Eastgate Biotech Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NetEase and Eastgate Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NetEase and Eastgate Biotech
The main advantage of trading using opposite NetEase and Eastgate Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase position performs unexpectedly, Eastgate Biotech 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 Eastgate Biotech will offset losses from the drop in Eastgate Biotech's long position.| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
| Eastgate Biotech vs. Relx PLC ADR | Eastgate Biotech vs. Emerson Radio | Eastgate Biotech vs. Daily Journal Corp | Eastgate Biotech vs. Four Seasons Education |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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