Correlation Between NetEase and Universal Stainless

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

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

Diversification Opportunities for NetEase and Universal Stainless

0.0

Correlation Coefficient

NetEase  Universal Stainless

Pay attention - limited upside

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

Pair Corralation between NetEase and Universal Stainless

If you would invest  9,237  in NetEase on December 22, 2024 and sell it today you would earn a total of  468.00  from holding NetEase or generate 5.07% return on investment over 90 days.

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

NetEase  vs.  Universal Stainless Alloy

NetEase

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, NetEase may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Universal Stainless Alloy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Stainless Alloy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Universal Stainless is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NetEase and Universal Stainless

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

The idea behind NetEase and Universal Stainless Alloy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.