Correlation Between NETGEAR and Baylin Technologies

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

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

Diversification Opportunities for NETGEAR and Baylin Technologies

-0.48

Correlation Coefficient

NETGEAR  Baylin Technologies

Very good diversification

The 3 months correlation between NETGEAR and Baylin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and NETGEAR 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 NETGEAR are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of NETGEAR i.e., NETGEAR and Baylin Technologies go up and down completely randomly.

Pair Corralation between NETGEAR and Baylin Technologies

Given the investment horizon of 90 days NETGEAR is expected to generate 0.65 times more return on investment than Baylin Technologies. However, NETGEAR is 1.54 times less risky than Baylin Technologies. It trades about 0.05 of its potential returns per unit of risk. Baylin Technologies is currently generating about -0.22 per unit of risk. If you would invest  2,460  in NETGEAR on November 29, 2024 and sell it today you would earn a total of  134.00  from holding NETGEAR or generate 5.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

NETGEAR  vs.  Baylin Technologies

NETGEAR

Risk-Adjusted Performance

Weak

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

Baylin Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baylin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NETGEAR and Baylin Technologies

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

The idea behind NETGEAR and Baylin Technologies 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.