Correlation Between Netgem SA and Broadpeak

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

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

Diversification Opportunities for Netgem SA and Broadpeak

-0.94

Correlation Coefficient

Netgem SA  Broadpeak

Pay attention - limited upside

The 3 months correlation between Netgem and Broadpeak is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Netgem SA and Broadpeak SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadpeak SA and Netgem SA 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 Netgem SA are associated (or correlated) with Broadpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadpeak SA has no effect on the direction of Netgem SA i.e., Netgem SA and Broadpeak go up and down completely randomly.

Pair Corralation between Netgem SA and Broadpeak

Assuming the 90 days trading horizon Netgem SA is expected to generate 1.12 times more return on investment than Broadpeak. However, Netgem SA is 1.12 times more volatile than Broadpeak SA. It trades about 0.13 of its potential returns per unit of risk. Broadpeak SA is currently generating about -0.31 per unit of risk. If you would invest  79.00  in Netgem SA on September 3, 2024 and sell it today you would earn a total of  22.00  from holding Netgem SA or generate 27.85% return on investment over 90 days.

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

Netgem SA  vs.  Broadpeak SA

Netgem SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Netgem SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Netgem SA reported solid returns over the last few months and may actually be approaching a breakup point.

Broadpeak SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Netgem SA and Broadpeak

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

The idea behind Netgem SA and Broadpeak SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.