Correlation Between NetSol Technologies and CompuGroup Medical

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

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

Diversification Opportunities for NetSol Technologies and CompuGroup Medical

-0.3

Correlation Coefficient

NetSol Technologies  CompuGroup Medical

Very good diversification

The 3 months correlation between NetSol and CompuGroup is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NetSol Technologies and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and NetSol Technologies 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 NetSol Technologies are associated (or correlated) with CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of NetSol Technologies i.e., NetSol Technologies and CompuGroup Medical go up and down completely randomly.

Pair Corralation between NetSol Technologies and CompuGroup Medical

Assuming the 90 days trading horizon NetSol Technologies is expected to generate 0.51 times more return on investment than CompuGroup Medical. However, NetSol Technologies is 1.97 times less risky than CompuGroup Medical. It trades about 0.03 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about 0.01 per unit of risk. If you would invest  234.00  in NetSol Technologies on September 26, 2024 and sell it today you would earn a total of  16.00  from holding NetSol Technologies or generate 6.84% return on investment over 90 days.

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

NetSol Technologies  vs.  CompuGroup Medical SE

NetSol Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NetSol Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NetSol Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CompuGroup Medical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical SE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NetSol Technologies and CompuGroup Medical

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

The idea behind NetSol Technologies and CompuGroup Medical SE 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.