Correlation Between Swvl Holdings and NetSol Technologies

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

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

Diversification Opportunities for Swvl Holdings and NetSol Technologies

0.21

Correlation Coefficient

Swvl Holdings  NetSol Technologies

Modest diversification

The 3 months correlation between Swvl and NetSol is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Swvl Holdings Corp and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and Swvl Holdings 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 Swvl Holdings Corp 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 Swvl Holdings i.e., Swvl Holdings and NetSol Technologies go up and down completely randomly.

Pair Corralation between Swvl Holdings and NetSol Technologies

Assuming the 90 days horizon Swvl Holdings Corp is expected to generate 4.67 times more return on investment than NetSol Technologies. However, Swvl Holdings is 4.67 times more volatile than NetSol Technologies. It trades about -0.01 of its potential returns per unit of risk. NetSol Technologies is currently generating about -0.07 per unit of risk. If you would invest  1.75  in Swvl Holdings Corp on December 4, 2024 and sell it today you would lose (0.42) from holding Swvl Holdings Corp or give up 24.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.44%
Values	Daily Returns

Swvl Holdings Corp  vs.  NetSol Technologies

Swvl Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swvl Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Swvl Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NetSol Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days NetSol Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Swvl Holdings and NetSol Technologies

The main advantage of trading using opposite Swvl Holdings and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swvl Holdings 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 Swvl Holdings Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.