Correlation Between NetEase and TG Venture

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

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

Diversification Opportunities for NetEase and TG Venture

0.0

Correlation Coefficient

NetEase  TG Venture

Pay attention - limited upside

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

Pair Corralation between NetEase and TG Venture

If you would invest  8,925  in NetEase on December 28, 2024 and sell it today you would earn a total of  1,154  from holding NetEase or generate 12.93% return on investment over 90 days.

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

NetEase  vs.  TG Venture Acquisition

NetEase

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, NetEase unveiled solid returns over the last few months and may actually be approaching a breakup point.

TG Venture Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days TG Venture Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, TG Venture is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NetEase and TG Venture

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

The idea behind NetEase and TG Venture Acquisition 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.