Correlation Between HubSpot and NetSol Technologies

Can any of the company-specific risk be diversified away by investing in both HubSpot 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 HubSpot and NetSol Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HubSpot and NetSol Technologies, you can compare the effects of market volatilities on HubSpot 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 HubSpot with a short position of NetSol Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of HubSpot and NetSol Technologies.

Diversification Opportunities for HubSpot and NetSol Technologies

-0.09

Correlation Coefficient

HubSpot  NetSol Technologies

Good diversification

The 3 months correlation between HubSpot and NetSol is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding HubSpot and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and HubSpot 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 HubSpot 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 HubSpot i.e., HubSpot and NetSol Technologies go up and down completely randomly.

Pair Corralation between HubSpot and NetSol Technologies

Assuming the 90 days horizon HubSpot is expected to generate 0.93 times more return on investment than NetSol Technologies. However, HubSpot is 1.08 times less risky than NetSol Technologies. It trades about 0.31 of its potential returns per unit of risk. NetSol Technologies is currently generating about 0.05 per unit of risk. If you would invest  44,990  in HubSpot on September 12, 2024 and sell it today you would earn a total of  24,650  from holding HubSpot or generate 54.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HubSpot  vs.  NetSol Technologies

HubSpot

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HubSpot are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, HubSpot reported solid returns over the last few months and may actually be approaching a breakup point.

NetSol Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetSol Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NetSol Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HubSpot and NetSol Technologies

The main advantage of trading using opposite HubSpot and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HubSpot 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.

The idea behind HubSpot and NetSol Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.