Correlation Between Network 1 and Mader Group

Can any of the company-specific risk be diversified away by investing in both Network 1 and Mader 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 Network 1 and Mader Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network 1 Technologies and Mader Group Limited, you can compare the effects of market volatilities on Network 1 and Mader 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 Network 1 with a short position of Mader Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network 1 and Mader Group.

Diversification Opportunities for Network 1 and Mader Group

0.26

Correlation Coefficient

Network 1  Mader Group

Modest diversification

The 3 months correlation between Network and Mader is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Network 1 Technologies and Mader Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mader Group Limited and Network 1 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 Network 1 Technologies are associated (or correlated) with Mader Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mader Group Limited has no effect on the direction of Network 1 i.e., Network 1 and Mader Group go up and down completely randomly.

Pair Corralation between Network 1 and Mader Group

Given the investment horizon of 90 days Network 1 Technologies is expected to under-perform the Mader Group. In addition to that, Network 1 is 1.75 times more volatile than Mader Group Limited. It trades about -0.15 of its total potential returns per unit of risk. Mader Group Limited is currently generating about -0.03 per unit of volatility. If you would invest  407.00  in Mader Group Limited on February 26, 2024 and sell it today you would lose (11.00) from holding Mader Group Limited or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Network 1 Technologies  vs.  Mader Group Limited

Network 1 Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network 1 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Mader Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mader Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Mader Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Network 1 and Mader Group

The main advantage of trading using opposite Network 1 and Mader Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network 1 position performs unexpectedly, Mader 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 Mader Group will offset losses from the drop in Mader Group's long position.

The idea behind Network 1 Technologies and Mader Group Limited 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.