Correlation Between NetSol Technologies and Asbury Automotive

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

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

Diversification Opportunities for NetSol Technologies and Asbury Automotive

-0.57

Correlation Coefficient

NetSol Technologies  Asbury Automotive

Excellent diversification

The 3 months correlation between NetSol and Asbury is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NetSol Technologies and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and NetSol Technologies 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 NetSol Technologies are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of NetSol Technologies i.e., NetSol Technologies and Asbury Automotive go up and down completely randomly.

Pair Corralation between NetSol Technologies and Asbury Automotive

Given the investment horizon of 90 days NetSol Technologies is expected to under-perform the Asbury Automotive. In addition to that, NetSol Technologies is 1.63 times more volatile than Asbury Automotive Group. It trades about -0.16 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.15 per unit of volatility. If you would invest  26,045  in Asbury Automotive Group on October 9, 2024 and sell it today you would lose (2,340) from holding Asbury Automotive Group or give up 8.98% of portfolio value over 90 days.

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

NetSol Technologies  vs.  Asbury Automotive Group

NetSol Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NetSol Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Asbury Automotive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Asbury Automotive may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NetSol Technologies and Asbury Automotive

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

The idea behind NetSol Technologies and Asbury Automotive Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.