Correlation Between Net 1 and COGNYTE SOFTWARE

Can any of the company-specific risk be diversified away by investing in both Net 1 and COGNYTE SOFTWARE 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 COGNYTE SOFTWARE 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 COGNYTE SOFTWARE LTD, you can compare the effects of market volatilities on Net 1 and COGNYTE SOFTWARE 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 COGNYTE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Net 1 and COGNYTE SOFTWARE.

Diversification Opportunities for Net 1 and COGNYTE SOFTWARE

-0.48

Correlation Coefficient

Net 1  COGNYTE SOFTWARE

Very good diversification

The 3 months correlation between Net and COGNYTE is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Net 1 Ueps and COGNYTE SOFTWARE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COGNYTE SOFTWARE LTD 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 COGNYTE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COGNYTE SOFTWARE LTD has no effect on the direction of Net 1 i.e., Net 1 and COGNYTE SOFTWARE go up and down completely randomly.

Pair Corralation between Net 1 and COGNYTE SOFTWARE

Assuming the 90 days trading horizon Net 1 Ueps is expected to generate 0.46 times more return on investment than COGNYTE SOFTWARE. However, Net 1 Ueps is 2.18 times less risky than COGNYTE SOFTWARE. It trades about -0.13 of its potential returns per unit of risk. COGNYTE SOFTWARE LTD is currently generating about -0.17 per unit of risk. If you would invest  366.00  in Net 1 Ueps on March 30, 2025 and sell it today you would lose (20.00) from holding Net 1 Ueps or give up 5.46% of portfolio value over 90 days.

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

Net 1 Ueps  vs.  COGNYTE SOFTWARE LTD

Net 1 Ueps

Risk-Adjusted Performance

Very Weak

Over the last 90 days Net 1 Ueps has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COGNYTE SOFTWARE LTD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COGNYTE SOFTWARE LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, COGNYTE SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Net 1 and COGNYTE SOFTWARE

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

The idea behind Net 1 Ueps and COGNYTE SOFTWARE LTD 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.