Correlation Between Net Insight and Bactiguard Holding

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

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

Diversification Opportunities for Net Insight and Bactiguard Holding

-0.09

Correlation Coefficient

Net Insight  Bactiguard Holding

Good diversification

The 3 months correlation between Net and Bactiguard is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Net Insight AB and Bactiguard Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiguard Holding and Net Insight 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 Net Insight AB are associated (or correlated) with Bactiguard Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiguard Holding has no effect on the direction of Net Insight i.e., Net Insight and Bactiguard Holding go up and down completely randomly.

Pair Corralation between Net Insight and Bactiguard Holding

Assuming the 90 days trading horizon Net Insight AB is expected to generate 0.69 times more return on investment than Bactiguard Holding. However, Net Insight AB is 1.46 times less risky than Bactiguard Holding. It trades about 0.04 of its potential returns per unit of risk. Bactiguard Holding AB is currently generating about -0.32 per unit of risk. If you would invest  677.00  in Net Insight AB on September 3, 2024 and sell it today you would earn a total of  24.00  from holding Net Insight AB or generate 3.55% return on investment over 90 days.

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

Net Insight AB  vs.  Bactiguard Holding AB

Net Insight AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Net Insight AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Net Insight is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bactiguard Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bactiguard Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic 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 Net Insight and Bactiguard Holding

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

The idea behind Net Insight AB and Bactiguard 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.