Correlation Between Netcall PLC and Reinsurance Group

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

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

Diversification Opportunities for Netcall PLC and Reinsurance Group

0.39

Correlation Coefficient

Netcall PLC  Reinsurance Group

Weak diversification

The 3 months correlation between Netcall and Reinsurance is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Netcall PLC and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and Netcall PLC 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 Netcall PLC are associated (or correlated) with Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Netcall PLC i.e., Netcall PLC and Reinsurance Group go up and down completely randomly.

Pair Corralation between Netcall PLC and Reinsurance Group

Assuming the 90 days horizon Netcall PLC is expected to generate 1.19 times more return on investment than Reinsurance Group. However, Netcall PLC is 1.19 times more volatile than Reinsurance Group of. It trades about 0.17 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.08 per unit of risk. If you would invest  101.00  in Netcall PLC on October 11, 2024 and sell it today you would earn a total of  28.00  from holding Netcall PLC or generate 27.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Netcall PLC  vs.  Reinsurance Group of

Netcall PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Netcall PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Netcall PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Reinsurance Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reinsurance Group of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Reinsurance Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Netcall PLC and Reinsurance Group

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

The idea behind Netcall PLC and Reinsurance Group of 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.