Correlation Between Neogrid Participaes and EBay

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

By analyzing existing cross correlation between Neogrid Participaes SA and eBay Inc, you can compare the effects of market volatilities on Neogrid Participaes and EBay 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 Neogrid Participaes with a short position of EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogrid Participaes and EBay.

Diversification Opportunities for Neogrid Participaes and EBay

0.13

Correlation Coefficient

Neogrid Participaes  EBay

Average diversification

The 3 months correlation between Neogrid and EBay is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Neogrid Participaes SA and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and Neogrid Participaes 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 Neogrid Participaes SA are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Neogrid Participaes i.e., Neogrid Participaes and EBay go up and down completely randomly.

Pair Corralation between Neogrid Participaes and EBay

Assuming the 90 days trading horizon Neogrid Participaes SA is expected to under-perform the EBay. In addition to that, Neogrid Participaes is 2.55 times more volatile than eBay Inc. It trades about -0.3 of its total potential returns per unit of risk. eBay Inc is currently generating about -0.01 per unit of volatility. If you would invest  19,361  in eBay Inc on October 5, 2024 and sell it today you would lose (125.00) from holding eBay Inc or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Neogrid Participaes SA  vs.  eBay Inc

Neogrid Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogrid Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

eBay Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EBay may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Neogrid Participaes and EBay

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

The idea behind Neogrid Participaes SA and eBay Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.