Correlation Between Here Media and NETGEAR

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

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

Diversification Opportunities for Here Media and NETGEAR

0.0

Correlation Coefficient

Here Media  NETGEAR

Pay attention - limited upside

The 3 months correlation between Here and NETGEAR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Here Media and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Here Media 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 Here Media are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Here Media i.e., Here Media and NETGEAR go up and down completely randomly.

Pair Corralation between Here Media and NETGEAR

Assuming the 90 days horizon Here Media is expected to generate 1.5 times more return on investment than NETGEAR. However, Here Media is 1.5 times more volatile than NETGEAR. It trades about 0.04 of its potential returns per unit of risk. NETGEAR is currently generating about 0.04 per unit of risk. If you would invest  0.01  in Here Media on September 26, 2024 and sell it today you would earn a total of  0.01  from holding Here Media or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Here Media  vs.  NETGEAR

Here Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Here Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Here Media is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

NETGEAR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Here Media and NETGEAR

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

The idea behind Here Media and NETGEAR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.