Correlation Between IZafe Group and Netel Holding

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

By analyzing existing cross correlation between iZafe Group AB and Netel Holding AB, you can compare the effects of market volatilities on IZafe Group and Netel Holding 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 IZafe Group with a short position of Netel Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of IZafe Group and Netel Holding.

Diversification Opportunities for IZafe Group and Netel Holding

0.16

Correlation Coefficient

IZafe Group  Netel Holding

Average diversification

The 3 months correlation between IZafe and Netel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding iZafe Group AB and Netel Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netel Holding AB and IZafe Group 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 iZafe Group AB are associated (or correlated) with Netel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netel Holding AB has no effect on the direction of IZafe Group i.e., IZafe Group and Netel Holding go up and down completely randomly.

Pair Corralation between IZafe Group and Netel Holding

Assuming the 90 days trading horizon iZafe Group AB is expected to generate 1.18 times more return on investment than Netel Holding. However, IZafe Group is 1.18 times more volatile than Netel Holding AB. It trades about 0.08 of its potential returns per unit of risk. Netel Holding AB is currently generating about -0.02 per unit of risk. If you would invest  26.00  in iZafe Group AB on April 24, 2025 and sell it today you would earn a total of  4.00  from holding iZafe Group AB or generate 15.38% return on investment over 90 days.

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

iZafe Group AB  vs.  Netel Holding AB

iZafe Group AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iZafe Group AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, IZafe Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Netel Holding AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netel Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Netel Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IZafe Group and Netel Holding

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

The idea behind iZafe Group AB and Netel Holding AB 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.