Correlation Between NETGEAR and J Long

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

By analyzing existing cross correlation between NETGEAR and J Long Group Limited, you can compare the effects of market volatilities on NETGEAR and J Long 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 J Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and J Long.

Diversification Opportunities for NETGEAR and J Long

-0.53

Correlation Coefficient

NETGEAR  J Long

Excellent diversification

The 3 months correlation between NETGEAR and J Long is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and J Long Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Long Group 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 J Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Long Group has no effect on the direction of NETGEAR i.e., NETGEAR and J Long go up and down completely randomly.

Pair Corralation between NETGEAR and J Long

Given the investment horizon of 90 days NETGEAR is expected to generate 0.28 times more return on investment than J Long. However, NETGEAR is 3.55 times less risky than J Long. It trades about 0.04 of its potential returns per unit of risk. J Long Group Limited is currently generating about -0.05 per unit of risk. If you would invest  1,951  in NETGEAR on September 26, 2024 and sell it today you would earn a total of  888.00  from holding NETGEAR or generate 45.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	49.05%
Values	Daily Returns

NETGEAR  vs.  J Long Group Limited

NETGEAR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

J Long Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and J Long

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

The idea behind NETGEAR and J Long Group Limited 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 Anywhere module to track or share privately all of your investments from the convenience of any device.