Correlation Between COMINTL BANK and NetSol Technologies

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

By analyzing existing cross correlation between COMINTL BANK ADR1 and NetSol Technologies, you can compare the effects of market volatilities on COMINTL BANK 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 COMINTL BANK with a short position of NetSol Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMINTL BANK and NetSol Technologies.

Diversification Opportunities for COMINTL BANK and NetSol Technologies

-0.41

Correlation Coefficient

COMINTL BANK  NetSol Technologies

Very good diversification

The 3 months correlation between COMINTL and NetSol is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding COMINTL BANK ADR1 and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and COMINTL BANK 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 COMINTL BANK ADR1 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 COMINTL BANK i.e., COMINTL BANK and NetSol Technologies go up and down completely randomly.

Pair Corralation between COMINTL BANK and NetSol Technologies

Assuming the 90 days trading horizon COMINTL BANK ADR1 is expected to generate 0.81 times more return on investment than NetSol Technologies. However, COMINTL BANK ADR1 is 1.23 times less risky than NetSol Technologies. It trades about 0.13 of its potential returns per unit of risk. NetSol Technologies is currently generating about -0.07 per unit of risk. If you would invest  117.00  in COMINTL BANK ADR1 on October 7, 2024 and sell it today you would earn a total of  11.00  from holding COMINTL BANK ADR1 or generate 9.4% return on investment over 90 days.

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

COMINTL BANK ADR1  vs.  NetSol Technologies

COMINTL BANK ADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMINTL BANK ADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COMINTL BANK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

NetSol Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NetSol Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with COMINTL BANK and NetSol Technologies

The main advantage of trading using opposite COMINTL BANK and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMINTL BANK 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 COMINTL BANK ADR1 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.

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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.