Correlation Between Binah Capital and NetEase

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

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

Diversification Opportunities for Binah Capital and NetEase

0.54

Correlation Coefficient

Binah Capital  NetEase

Very weak diversification

The 3 months correlation between Binah and NetEase is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Binah Capital Group, and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and Binah Capital 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 Binah Capital Group, are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Binah Capital i.e., Binah Capital and NetEase go up and down completely randomly.

Pair Corralation between Binah Capital and NetEase

Assuming the 90 days horizon Binah Capital is expected to generate 1.26 times less return on investment than NetEase. In addition to that, Binah Capital is 6.26 times more volatile than NetEase. It trades about 0.02 of its total potential returns per unit of risk. NetEase is currently generating about 0.17 per unit of volatility. If you would invest  9,222  in NetEase on October 25, 2024 and sell it today you would earn a total of  730.00  from holding NetEase or generate 7.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.68%
Values	Daily Returns

Binah Capital Group,  vs.  NetEase

Binah Capital Group,

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Binah Capital Group, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Binah Capital showed solid returns over the last few months and may actually be approaching a breakup point.

NetEase

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, NetEase unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binah Capital and NetEase

The main advantage of trading using opposite Binah Capital and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binah Capital position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.

The idea behind Binah Capital Group, and NetEase 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .