Correlation Between Netgem SA and Cogelec SA
Can any of the company-specific risk be diversified away by investing in both Netgem SA and Cogelec SA 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 Cogelec SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netgem SA and Cogelec SA, you can compare the effects of market volatilities on Netgem SA and Cogelec SA 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 Cogelec SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netgem SA and Cogelec SA.
Diversification Opportunities for Netgem SA and Cogelec SA
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Netgem and Cogelec is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Netgem SA and Cogelec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogelec 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 Cogelec SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogelec SA has no effect on the direction of Netgem SA i.e., Netgem SA and Cogelec SA go up and down completely randomly.
Pair Corralation between Netgem SA and Cogelec SA
Assuming the 90 days trading horizon Netgem SA is expected to generate 3.22 times less return on investment than Cogelec SA. In addition to that, Netgem SA is 1.37 times more volatile than Cogelec SA. It trades about 0.05 of its total potential returns per unit of risk. Cogelec SA is currently generating about 0.22 per unit of volatility. If you would invest 1,140 in Cogelec SA on September 24, 2024 and sell it today you would earn a total of 370.00 from holding Cogelec SA or generate 32.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Netgem SA vs. Cogelec SA
Performance |
Timeline |
Netgem SA |
Cogelec SA |
Netgem SA and Cogelec SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Netgem SA and Cogelec SA
The main advantage of trading using opposite Netgem SA and Cogelec SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netgem SA position performs unexpectedly, Cogelec SA 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 Cogelec SA will offset losses from the drop in Cogelec SA's long position.The idea behind Netgem SA and Cogelec 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.Cogelec SA vs. Ekinops SA | Cogelec SA vs. Damartex | Cogelec SA vs. Graines Voltz SA | Cogelec SA vs. Riber SA |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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