Correlation Between Hf Foods and NetSol Technologies

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

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

Diversification Opportunities for Hf Foods and NetSol Technologies

-0.23

Correlation Coefficient

Hf Foods  NetSol Technologies

Very good diversification

The 3 months correlation between HFFG and NetSol is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and Hf Foods 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 Hf Foods Group 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 Hf Foods i.e., Hf Foods and NetSol Technologies go up and down completely randomly.

Pair Corralation between Hf Foods and NetSol Technologies

Given the investment horizon of 90 days Hf Foods Group is expected to generate 1.57 times more return on investment than NetSol Technologies. However, Hf Foods is 1.57 times more volatile than NetSol Technologies. It trades about 0.26 of its potential returns per unit of risk. NetSol Technologies is currently generating about 0.1 per unit of risk. If you would invest  342.00  in Hf Foods Group on September 16, 2024 and sell it today you would earn a total of  39.00  from holding Hf Foods Group or generate 11.4% return on investment over 90 days.

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

Hf Foods Group  vs.  NetSol Technologies

Hf Foods Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hf Foods Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Hf Foods reported 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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hf Foods and NetSol Technologies

The main advantage of trading using opposite Hf Foods and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hf Foods 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 Hf Foods Group 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.