Correlation Between NetSol Technologies and GENERAL

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

By analyzing existing cross correlation between NetSol Technologies and GENERAL ELECTRIC CO, you can compare the effects of market volatilities on NetSol Technologies and GENERAL 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 GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetSol Technologies and GENERAL.

Diversification Opportunities for NetSol Technologies and GENERAL

-0.12

Correlation Coefficient

NetSol Technologies  GENERAL

Good diversification

The 3 months correlation between NetSol and GENERAL is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NetSol Technologies and GENERAL ELECTRIC CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELECTRIC 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELECTRIC has no effect on the direction of NetSol Technologies i.e., NetSol Technologies and GENERAL go up and down completely randomly.

Pair Corralation between NetSol Technologies and GENERAL

Given the investment horizon of 90 days NetSol Technologies is expected to under-perform the GENERAL. In addition to that, NetSol Technologies is 1.87 times more volatile than GENERAL ELECTRIC CO. It trades about -0.12 of its total potential returns per unit of risk. GENERAL ELECTRIC CO is currently generating about 0.04 per unit of volatility. If you would invest  9,249  in GENERAL ELECTRIC CO on October 26, 2024 and sell it today you would earn a total of  207.00  from holding GENERAL ELECTRIC CO or generate 2.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.22%
Values	Daily Returns

NetSol Technologies  vs.  GENERAL ELECTRIC CO

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.

GENERAL ELECTRIC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GENERAL ELECTRIC CO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GENERAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NetSol Technologies and GENERAL

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

The idea behind NetSol Technologies and GENERAL ELECTRIC CO 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.