Correlation Between NCAB and Netel Holding

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

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

Diversification Opportunities for NCAB and Netel Holding

0.53

Correlation Coefficient

NCAB  Netel Holding

Very weak diversification

The 3 months correlation between NCAB and Netel is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NCAB Group and Netel Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netel Holding AB and NCAB 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 NCAB Group are associated (or correlated) with Netel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netel Holding AB has no effect on the direction of NCAB i.e., NCAB and Netel Holding go up and down completely randomly.

Pair Corralation between NCAB and Netel Holding

Assuming the 90 days trading horizon NCAB Group is expected to under-perform the Netel Holding. But the stock apears to be less risky and, when comparing its historical volatility, NCAB Group is 1.4 times less risky than Netel Holding. The stock trades about -0.01 of its potential returns per unit of risk. The Netel Holding AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,900  in Netel Holding AB on August 31, 2024 and sell it today you would lose (606.00) from holding Netel Holding AB or give up 31.89% of portfolio value over 90 days.

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

NCAB Group  vs.  Netel Holding AB

NCAB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCAB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Netel Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Netel Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NCAB and Netel Holding

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

The idea behind NCAB Group and Netel Holding 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.