Correlation Between Evolution and NetJobs Group

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

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

Diversification Opportunities for Evolution and NetJobs Group

0.42

Correlation Coefficient

Evolution  NetJobs Group

Very weak diversification

The 3 months correlation between Evolution and NetJobs is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and NetJobs Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetJobs Group AB and Evolution 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 Evolution AB are associated (or correlated) with NetJobs Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetJobs Group AB has no effect on the direction of Evolution i.e., Evolution and NetJobs Group go up and down completely randomly.

Pair Corralation between Evolution and NetJobs Group

Assuming the 90 days trading horizon Evolution AB is expected to under-perform the NetJobs Group. But the stock apears to be less risky and, when comparing its historical volatility, Evolution AB is 2.09 times less risky than NetJobs Group. The stock trades about -0.05 of its potential returns per unit of risk. The NetJobs Group AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  34.00  in NetJobs Group AB on September 3, 2024 and sell it today you would earn a total of  2.00  from holding NetJobs Group AB or generate 5.88% return on investment over 90 days.

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

Evolution AB  vs.  NetJobs Group AB

Evolution AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NetJobs Group AB

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Evolution and NetJobs Group

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

The idea behind Evolution AB and NetJobs Group AB 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.