Correlation Between Fair Isaac and NetEase

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

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

Diversification Opportunities for Fair Isaac and NetEase

-0.73

Correlation Coefficient

Fair Isaac  NetEase

Pay attention - limited upside

The 3 months correlation between Fair and NetEase is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and Fair Isaac 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 Fair Isaac are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Fair Isaac i.e., Fair Isaac and NetEase go up and down completely randomly.

Pair Corralation between Fair Isaac and NetEase

Assuming the 90 days trading horizon Fair Isaac is expected to under-perform the NetEase. In addition to that, Fair Isaac is 1.54 times more volatile than NetEase. It trades about -0.07 of its total potential returns per unit of risk. NetEase is currently generating about 0.17 per unit of volatility. If you would invest  5,892  in NetEase on April 23, 2025 and sell it today you would earn a total of  1,727  from holding NetEase or generate 29.31% return on investment over 90 days.

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

Fair Isaac  vs.  NetEase

Fair Isaac

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NetEase

Risk-Adjusted Performance

Good

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

Pair Trading with Fair Isaac and NetEase

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

The idea behind Fair Isaac and NetEase 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.