Correlation Between NetEase and Mattel

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

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

Diversification Opportunities for NetEase and Mattel

-0.12

Correlation Coefficient

NetEase  Mattel

Good diversification

The 3 months correlation between NetEase and Mattel is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and NetEase 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 NetEase are associated (or correlated) with Mattel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mattel Inc has no effect on the direction of NetEase i.e., NetEase and Mattel go up and down completely randomly.

Pair Corralation between NetEase and Mattel

Given the investment horizon of 90 days NetEase is expected to generate 0.6 times more return on investment than Mattel. However, NetEase is 1.67 times less risky than Mattel. It trades about 0.1 of its potential returns per unit of risk. Mattel Inc is currently generating about -0.04 per unit of risk. If you would invest  11,845  in NetEase on May 18, 2025 and sell it today you would earn a total of  1,077  from holding NetEase or generate 9.09% return on investment over 90 days.

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

NetEase  vs.  Mattel Inc

NetEase

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, NetEase may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Mattel Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Mattel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NetEase and Mattel

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

The idea behind NetEase and Mattel Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.