Correlation Between Sun Country and NetSol Technologies

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

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

Diversification Opportunities for Sun Country and NetSol Technologies

-0.41

Correlation Coefficient

Sun Country  NetSol Technologies

Very good diversification

The 3 months correlation between Sun and NetSol is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and Sun Country 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 Sun Country Airlines 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 Sun Country i.e., Sun Country and NetSol Technologies go up and down completely randomly.

Pair Corralation between Sun Country and NetSol Technologies

Given the investment horizon of 90 days Sun Country is expected to generate 1.05 times less return on investment than NetSol Technologies. But when comparing it to its historical volatility, Sun Country Airlines is 1.01 times less risky than NetSol Technologies. It trades about 0.01 of its potential returns per unit of risk. NetSol Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  281.00  in NetSol Technologies on September 23, 2024 and sell it today you would lose (15.00) from holding NetSol Technologies or give up 5.34% of portfolio value over 90 days.

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

Sun Country Airlines  vs.  NetSol Technologies

Sun Country Airlines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Sun Country showed solid returns over the last few months and may actually be approaching a breakup point.

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 Sun Country and NetSol Technologies

The main advantage of trading using opposite Sun Country and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country 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 Sun Country Airlines 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.