Correlation Between NeoMagic and Metalink

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

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

Diversification Opportunities for NeoMagic and Metalink

0.0

Correlation Coefficient

NeoMagic  Metalink

Pay attention - limited upside

The 3 months correlation between NeoMagic and Metalink is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NeoMagic and Metalink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalink and NeoMagic 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 NeoMagic are associated (or correlated) with Metalink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalink has no effect on the direction of NeoMagic i.e., NeoMagic and Metalink go up and down completely randomly.

Pair Corralation between NeoMagic and Metalink

If you would invest (100.00) in NeoMagic on December 21, 2024 and sell it today you would earn a total of  100.00  from holding NeoMagic or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NeoMagic  vs.  Metalink

NeoMagic

Risk-Adjusted Performance

Very Weak

Over the last 90 days NeoMagic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, NeoMagic is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Metalink

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Metalink is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with NeoMagic and Metalink

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

The idea behind NeoMagic and Metalink 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.