Correlation Between Neto ME and Maytronics

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

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

Diversification Opportunities for Neto ME and Maytronics

-0.35

Correlation Coefficient

Neto ME  Maytronics

Very good diversification

The 3 months correlation between Neto and Maytronics is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Neto ME Holdings and Maytronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maytronics and Neto ME 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 Neto ME Holdings are associated (or correlated) with Maytronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maytronics has no effect on the direction of Neto ME i.e., Neto ME and Maytronics go up and down completely randomly.

Pair Corralation between Neto ME and Maytronics

Assuming the 90 days trading horizon Neto ME Holdings is expected to generate 0.34 times more return on investment than Maytronics. However, Neto ME Holdings is 2.92 times less risky than Maytronics. It trades about 0.2 of its potential returns per unit of risk. Maytronics is currently generating about -0.1 per unit of risk. If you would invest  709,800  in Neto ME Holdings on September 5, 2024 and sell it today you would earn a total of  259,300  from holding Neto ME Holdings or generate 36.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Neto ME Holdings  vs.  Maytronics

Neto ME Holdings

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Neto ME Holdings are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Neto ME sustained solid returns over the last few months and may actually be approaching a breakup point.

Maytronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maytronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Maytronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Neto ME and Maytronics

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

The idea behind Neto ME Holdings and Maytronics 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.