Correlation Between Cracker Barrel and NetSol Technologies

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

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

Diversification Opportunities for Cracker Barrel and NetSol Technologies

0.82

Correlation Coefficient

Cracker Barrel  NetSol Technologies

Very poor diversification

The 3 months correlation between Cracker and NetSol is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies and Cracker Barrel 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 Cracker Barrel Old are associated (or correlated) with NetSol Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetSol Technologies has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and NetSol Technologies go up and down completely randomly.

Pair Corralation between Cracker Barrel and NetSol Technologies

Given the investment horizon of 90 days Cracker Barrel is expected to generate 1.46 times less return on investment than NetSol Technologies. In addition to that, Cracker Barrel is 1.21 times more volatile than NetSol Technologies. It trades about 0.18 of its total potential returns per unit of risk. NetSol Technologies is currently generating about 0.33 per unit of volatility. If you would invest  238.00  in NetSol Technologies on May 1, 2025 and sell it today you would earn a total of  200.00  from holding NetSol Technologies or generate 84.03% return on investment over 90 days.

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

Cracker Barrel Old  vs.  NetSol Technologies

Cracker Barrel Old

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

NetSol Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NetSol Technologies are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, NetSol Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cracker Barrel and NetSol Technologies

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

The idea behind Cracker Barrel Old and NetSol Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.