Correlation Between International Business and NetSol Technologies

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

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

Diversification Opportunities for International Business and NetSol Technologies

0.0

Correlation Coefficient

International Business  NetSol Technologies

Pay attention - limited upside

The 3 months correlation between International and NetSol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and International Business 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 International Business Machines 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 International Business i.e., International Business and NetSol Technologies go up and down completely randomly.

Pair Corralation between International Business and NetSol Technologies

Assuming the 90 days trading horizon International Business Machines is expected to generate 0.65 times more return on investment than NetSol Technologies. However, International Business Machines is 1.55 times less risky than NetSol Technologies. It trades about 0.16 of its potential returns per unit of risk. NetSol Technologies is currently generating about 0.05 per unit of risk. If you would invest  18,883  in International Business Machines on September 12, 2024 and sell it today you would earn a total of  3,217  from holding International Business Machines or generate 17.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

International Business Machine  vs.  NetSol Technologies

International Business

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, International Business unveiled solid returns over the last few months and may actually be approaching a breakup point.

NetSol Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetSol Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NetSol Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with International Business and NetSol Technologies

The main advantage of trading using opposite International Business and NetSol Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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 International Business Machines 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.