Correlation Between SMA Solar and NetSol Technologies
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and NetSol Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and NetSol Technologies, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of NetSol Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and NetSol Technologies.
Diversification Opportunities for SMA Solar and NetSol Technologies
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMA and NetSol is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and NetSol Technologies go up and down completely randomly.
Pair Corralation between SMA Solar and NetSol Technologies
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the NetSol Technologies. In addition to that, SMA Solar is 1.71 times more volatile than NetSol Technologies. It trades about -0.09 of its total potential returns per unit of risk. NetSol Technologies is currently generating about -0.08 per unit of volatility. If you would invest 266.00 in NetSol Technologies on September 2, 2024 and sell it today you would lose (16.00) from holding NetSol Technologies or give up 6.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. NetSol Technologies
Performance |
| Timeline |
| SMA Solar Technology |
| NetSol Technologies |
SMA Solar and NetSol Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and NetSol Technologies
The main advantage of trading using opposite SMA Solar and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Ming Le Sports | SMA Solar vs. Columbia Sportswear | SMA Solar vs. CVW CLEANTECH INC | SMA Solar vs. CHINA TONTINE WINES |
| NetSol Technologies vs. Synopsys | NetSol Technologies vs. Superior Plus Corp | NetSol Technologies vs. NMI Holdings | NetSol Technologies vs. Origin Agritech |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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