Correlation Between Shimmick Common and NetSol Technologies

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

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

Diversification Opportunities for Shimmick Common and NetSol Technologies

-0.42

Correlation Coefficient

Shimmick Common  NetSol Technologies

Very good diversification

The 3 months correlation between Shimmick and NetSol is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shimmick Common and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and Shimmick Common 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 Shimmick Common are associated (or correlated) with NetSol Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetSol Technologies has no effect on the direction of Shimmick Common i.e., Shimmick Common and NetSol Technologies go up and down completely randomly.

Pair Corralation between Shimmick Common and NetSol Technologies

Given the investment horizon of 90 days Shimmick Common is expected to generate 7.0 times more return on investment than NetSol Technologies. However, Shimmick Common is 7.0 times more volatile than NetSol Technologies. It trades about 0.15 of its potential returns per unit of risk. NetSol Technologies is currently generating about -0.02 per unit of risk. If you would invest  213.00  in Shimmick Common on September 24, 2024 and sell it today you would earn a total of  33.00  from holding Shimmick Common or generate 15.49% return on investment over 90 days.

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

Shimmick Common  vs.  NetSol Technologies

Shimmick Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shimmick Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Shimmick Common is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 quite persistent basic indicators, NetSol Technologies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Shimmick Common and NetSol Technologies

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

The idea behind Shimmick Common and NetSol Technologies 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.