Correlation Between Entheon Biomedical and NETGEAR

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

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

Diversification Opportunities for Entheon Biomedical and NETGEAR

0.61

Correlation Coefficient

Entheon Biomedical  NETGEAR

Poor diversification

The 3 months correlation between Entheon and NETGEAR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Entheon Biomedical Corp and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Entheon Biomedical 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 Entheon Biomedical Corp are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Entheon Biomedical i.e., Entheon Biomedical and NETGEAR go up and down completely randomly.

Pair Corralation between Entheon Biomedical and NETGEAR

Assuming the 90 days horizon Entheon Biomedical Corp is expected to generate 9.35 times more return on investment than NETGEAR. However, Entheon Biomedical is 9.35 times more volatile than NETGEAR. It trades about 0.1 of its potential returns per unit of risk. NETGEAR is currently generating about 0.03 per unit of risk. If you would invest  23.00  in Entheon Biomedical Corp on October 13, 2024 and sell it today you would lose (9.00) from holding Entheon Biomedical Corp or give up 39.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Entheon Biomedical Corp  vs.  NETGEAR

Entheon Biomedical Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entheon Biomedical Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Entheon Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

NETGEAR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entheon Biomedical and NETGEAR

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

The idea behind Entheon Biomedical Corp and NETGEAR 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.