Correlation Between Waste Management and NetEase
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and NetEase, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and NetEase.
Diversification Opportunities for Waste Management and NetEase
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waste and NetEase is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and NetEase go up and down completely randomly.
Pair Corralation between Waste Management and NetEase
Assuming the 90 days trading horizon Waste Management is expected to under-perform the NetEase. But the stock apears to be less risky and, when comparing its historical volatility, Waste Management is 1.79 times less risky than NetEase. The stock trades about -0.02 of its potential returns per unit of risk. The NetEase is currently generating about 0.17 of returns per unit of risk over similar time horizon. 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 | Insignificant |
Accuracy | 98.41% |
Values | Daily Returns |
Waste Management vs. NetEase
Performance |
Timeline |
Waste Management |
NetEase |
Waste Management and NetEase Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Waste Management and NetEase
The main advantage of trading using opposite Waste Management and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.Waste Management vs. Orizon Valorizao de | Waste Management vs. Ambipar Participaes e | Waste Management vs. Marfrig Global Foods | Waste Management vs. Ita Unibanco Holding |
NetEase vs. Electronic Arts | NetEase vs. Take Two Interactive Software | NetEase vs. Energisa SA | NetEase vs. Humana Inc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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