Correlation Between NETGEAR and Agape ATP

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

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

Diversification Opportunities for NETGEAR and Agape ATP

-0.6

Correlation Coefficient

NETGEAR  Agape ATP

Excellent diversification

The 3 months correlation between NETGEAR and Agape is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Agape ATP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agape ATP and NETGEAR 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 NETGEAR are associated (or correlated) with Agape ATP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agape ATP has no effect on the direction of NETGEAR i.e., NETGEAR and Agape ATP go up and down completely randomly.

Pair Corralation between NETGEAR and Agape ATP

Given the investment horizon of 90 days NETGEAR is expected to generate 0.45 times more return on investment than Agape ATP. However, NETGEAR is 2.24 times less risky than Agape ATP. It trades about 0.13 of its potential returns per unit of risk. Agape ATP is currently generating about -0.11 per unit of risk. If you would invest  2,136  in NETGEAR on September 14, 2024 and sell it today you would earn a total of  402.00  from holding NETGEAR or generate 18.82% return on investment over 90 days.

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

NETGEAR  vs.  Agape ATP

NETGEAR

Risk-Adjusted Performance

10 of 100

OK

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

Agape ATP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agape ATP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NETGEAR and Agape ATP

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

The idea behind NETGEAR and Agape ATP 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.