Correlation Between NetSol Technologies and ITTEFAQ Iron

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

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

Diversification Opportunities for NetSol Technologies and ITTEFAQ Iron

0.75

Correlation Coefficient

NetSol Technologies  ITTEFAQ Iron

Poor diversification

The 3 months correlation between NetSol and ITTEFAQ is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NetSol Technologies and ITTEFAQ Iron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITTEFAQ Iron Industries and NetSol Technologies 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 NetSol Technologies are associated (or correlated) with ITTEFAQ Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITTEFAQ Iron Industries has no effect on the direction of NetSol Technologies i.e., NetSol Technologies and ITTEFAQ Iron go up and down completely randomly.

Pair Corralation between NetSol Technologies and ITTEFAQ Iron

Assuming the 90 days trading horizon NetSol Technologies is expected to generate 1.9 times less return on investment than ITTEFAQ Iron. But when comparing it to its historical volatility, NetSol Technologies is 1.25 times less risky than ITTEFAQ Iron. It trades about 0.05 of its potential returns per unit of risk. ITTEFAQ Iron Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  775.00  in ITTEFAQ Iron Industries on April 21, 2025 and sell it today you would earn a total of  113.00  from holding ITTEFAQ Iron Industries or generate 14.58% return on investment over 90 days.

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

NetSol Technologies  vs.  ITTEFAQ Iron Industries

NetSol Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetSol Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NetSol Technologies may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ITTEFAQ Iron Industries

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ITTEFAQ Iron Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, ITTEFAQ Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NetSol Technologies and ITTEFAQ Iron

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

The idea behind NetSol Technologies and ITTEFAQ Iron Industries 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.