Correlation Between Net 1 and Dropbox

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

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

Diversification Opportunities for Net 1 and Dropbox

-0.28

Correlation Coefficient

Net 1  Dropbox

Very good diversification

The 3 months correlation between Net and Dropbox is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Net 1 Ueps and Dropbox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dropbox and Net 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 Net 1 Ueps are associated (or correlated) with Dropbox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dropbox has no effect on the direction of Net 1 i.e., Net 1 and Dropbox go up and down completely randomly.

Pair Corralation between Net 1 and Dropbox

Assuming the 90 days trading horizon Net 1 Ueps is expected to generate 2.04 times more return on investment than Dropbox. However, Net 1 is 2.04 times more volatile than Dropbox. It trades about 0.03 of its potential returns per unit of risk. Dropbox is currently generating about -0.01 per unit of risk. If you would invest  378.00  in Net 1 Ueps on April 22, 2025 and sell it today you would earn a total of  8.00  from holding Net 1 Ueps or generate 2.12% return on investment over 90 days.

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

Net 1 Ueps  vs.  Dropbox

Net 1 Ueps

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Net 1 Ueps are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Net 1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dropbox

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Net 1 and Dropbox

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

The idea behind Net 1 Ueps and Dropbox 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.