Correlation Between USWE Sports and NetJobs Group

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

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

Diversification Opportunities for USWE Sports and NetJobs Group

0.07

Correlation Coefficient

USWE Sports  NetJobs Group

Significant diversification

The 3 months correlation between USWE and NetJobs is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports AB and NetJobs Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetJobs Group AB and USWE Sports 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 USWE Sports AB are associated (or correlated) with NetJobs Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetJobs Group AB has no effect on the direction of USWE Sports i.e., USWE Sports and NetJobs Group go up and down completely randomly.

Pair Corralation between USWE Sports and NetJobs Group

Assuming the 90 days trading horizon USWE Sports AB is expected to under-perform the NetJobs Group. But the stock apears to be less risky and, when comparing its historical volatility, USWE Sports AB is 1.19 times less risky than NetJobs Group. The stock trades about -0.02 of its potential returns per unit of risk. The NetJobs Group AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  97.00  in NetJobs Group AB on September 5, 2024 and sell it today you would lose (55.00) from holding NetJobs Group AB or give up 56.7% of portfolio value over 90 days.

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

USWE Sports AB  vs.  NetJobs Group AB

USWE Sports AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE Sports AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

NetJobs Group AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NetJobs Group AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NetJobs Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with USWE Sports and NetJobs Group

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

The idea behind USWE Sports AB and NetJobs Group AB 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.