Correlation Between NetEase and TTM Technologies
Can any of the company-specific risk be diversified away by investing in both NetEase and TTM 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 NetEase and TTM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and TTM Technologies, you can compare the effects of market volatilities on NetEase and TTM 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 NetEase with a short position of TTM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and TTM Technologies.
Diversification Opportunities for NetEase and TTM Technologies
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NetEase and TTM is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies 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 TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of NetEase i.e., NetEase and TTM Technologies go up and down completely randomly.
Pair Corralation between NetEase and TTM Technologies
Given the investment horizon of 90 days NetEase is expected to generate 0.95 times more return on investment than TTM Technologies. However, NetEase is 1.06 times less risky than TTM Technologies. It trades about 0.01 of its potential returns per unit of risk. TTM Technologies is currently generating about 0.01 per unit of risk. If you would invest 9,048 in NetEase on January 20, 2024 and sell it today you would earn a total of 202.00 from holding NetEase or generate 2.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NetEase vs. TTM Technologies
Performance |
Timeline |
NetEase |
TTM Technologies |
NetEase and TTM Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NetEase and TTM Technologies
The main advantage of trading using opposite NetEase and TTM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase position performs unexpectedly, TTM 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 TTM Technologies will offset losses from the drop in TTM Technologies' long position.The idea behind NetEase and TTM 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.TTM Technologies vs. Maximus | TTM Technologies vs. Network 1 Technologies | TTM Technologies vs. First Advantage Corp | TTM Technologies vs. BrightView Holdings |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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