Correlation Between NetEase and XTL Biopharmaceutica

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NetEase and XTL Biopharmaceutica 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 NetEase and XTL Biopharmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and XTL Biopharmaceuticals, you can compare the effects of market volatilities on NetEase and XTL Biopharmaceutica 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 NetEase with a short position of XTL Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and XTL Biopharmaceutica.

Diversification Opportunities for NetEase and XTL Biopharmaceutica

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between NetEase and XTL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and XTL Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTL Biopharmaceuticals and NetEase 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 NetEase are associated (or correlated) with XTL Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTL Biopharmaceuticals has no effect on the direction of NetEase i.e., NetEase and XTL Biopharmaceutica go up and down completely randomly.

Pair Corralation between NetEase and XTL Biopharmaceutica

Given the investment horizon of 90 days NetEase is expected to under-perform the XTL Biopharmaceutica. But the stock apears to be less risky and, when comparing its historical volatility, NetEase is 21.2 times less risky than XTL Biopharmaceutica. The stock trades about -0.2 of its potential returns per unit of risk. The XTL Biopharmaceuticals is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  330.00  in XTL Biopharmaceuticals on December 29, 2023 and sell it today you would earn a total of  740.00  from holding XTL Biopharmaceuticals or generate 224.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy81.82%
ValuesDaily Returns

NetEase  vs.  XTL Biopharmaceuticals

 Performance 
       Timeline  
NetEase 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, NetEase unveiled solid returns over the last few months and may actually be approaching a breakup point.
XTL Biopharmaceuticals 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in XTL Biopharmaceuticals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, XTL Biopharmaceutica sustained solid returns over the last few months and may actually be approaching a breakup point.

NetEase and XTL Biopharmaceutica Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NetEase and XTL Biopharmaceutica

The main advantage of trading using opposite NetEase and XTL Biopharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase position performs unexpectedly, XTL Biopharmaceutica 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 XTL Biopharmaceutica will offset losses from the drop in XTL Biopharmaceutica's long position.
The idea behind NetEase and XTL Biopharmaceuticals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

Other Complementary Tools

Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency