Correlation Between NETGEAR and VS Media

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

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

Diversification Opportunities for NETGEAR and VS Media

0.21

Correlation Coefficient

NETGEAR  VS Media

Modest diversification

The 3 months correlation between NETGEAR and VSME is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and VS Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VS Media Holdings 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 VS Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VS Media Holdings has no effect on the direction of NETGEAR i.e., NETGEAR and VS Media go up and down completely randomly.

Pair Corralation between NETGEAR and VS Media

Given the investment horizon of 90 days NETGEAR is expected to generate 0.23 times more return on investment than VS Media. However, NETGEAR is 4.27 times less risky than VS Media. It trades about 0.04 of its potential returns per unit of risk. VS Media Holdings is currently generating about -0.02 per unit of risk. If you would invest  1,724  in NETGEAR on December 2, 2024 and sell it today you would earn a total of  906.00  from holding NETGEAR or generate 52.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	72.32%
Values	Daily Returns

NETGEAR  vs.  VS Media Holdings

NETGEAR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 4 (%) 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 April 2025.

VS Media Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days VS Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, VS Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NETGEAR and VS Media

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

The idea behind NETGEAR and VS Media Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.