Correlation Between NetEase and Harsco

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

By analyzing existing cross correlation between NetEase and Harsco 575 percent, you can compare the effects of market volatilities on NetEase and Harsco 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 Harsco. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and Harsco.

Diversification Opportunities for NetEase and Harsco

-0.08

Correlation Coefficient

NetEase  Harsco

Good diversification

The 3 months correlation between NetEase and Harsco is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and Harsco 575 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harsco 575 percent 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 Harsco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harsco 575 percent has no effect on the direction of NetEase i.e., NetEase and Harsco go up and down completely randomly.

Pair Corralation between NetEase and Harsco

Given the investment horizon of 90 days NetEase is expected to generate 1.82 times more return on investment than Harsco. However, NetEase is 1.82 times more volatile than Harsco 575 percent. It trades about 0.03 of its potential returns per unit of risk. Harsco 575 percent is currently generating about -0.15 per unit of risk. If you would invest  8,764  in NetEase on October 10, 2024 and sell it today you would earn a total of  208.00  from holding NetEase or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

NetEase  vs.  Harsco 575 percent

NetEase

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, NetEase is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Harsco 575 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harsco 575 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for Harsco 575 percent investors.

Pair Trading with NetEase and Harsco

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

The idea behind NetEase and Harsco 575 percent 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.