Correlation Between Netcompany Group and Trifork Holding

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

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

Diversification Opportunities for Netcompany Group and Trifork Holding

-0.88

Correlation Coefficient

Netcompany Group  Trifork Holding

Pay attention - limited upside

The 3 months correlation between Netcompany and Trifork is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Netcompany Group AS and Trifork Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trifork Holding AG and Netcompany Group 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 Netcompany Group AS are associated (or correlated) with Trifork Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trifork Holding AG has no effect on the direction of Netcompany Group i.e., Netcompany Group and Trifork Holding go up and down completely randomly.

Pair Corralation between Netcompany Group and Trifork Holding

Assuming the 90 days trading horizon Netcompany Group AS is expected to generate 0.86 times more return on investment than Trifork Holding. However, Netcompany Group AS is 1.17 times less risky than Trifork Holding. It trades about 0.17 of its potential returns per unit of risk. Trifork Holding AG is currently generating about -0.11 per unit of risk. If you would invest  29,400  in Netcompany Group AS on September 5, 2024 and sell it today you would earn a total of  6,800  from holding Netcompany Group AS or generate 23.13% return on investment over 90 days.

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

Netcompany Group AS  vs.  Trifork Holding AG

Netcompany Group

Risk-Adjusted Performance

13 of 100

Good

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

Trifork Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trifork Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Netcompany Group and Trifork Holding

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

The idea behind Netcompany Group AS and Trifork Holding AG 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.