Correlation Between NetEase and ATT

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

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

Diversification Opportunities for NetEase and ATT

0.76

Correlation Coefficient

NetEase  ATT

Poor diversification

The 3 months correlation between NetEase and ATT is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of NetEase i.e., NetEase and ATT go up and down completely randomly.

Pair Corralation between NetEase and ATT

Given the investment horizon of 90 days NetEase is expected to generate 3.57 times more return on investment than ATT. However, NetEase is 3.57 times more volatile than ATT Inc. It trades about 0.12 of its potential returns per unit of risk. ATT Inc is currently generating about 0.14 per unit of risk. If you would invest  13,247  in NetEase on July 5, 2025 and sell it today you would earn a total of  1,910  from holding NetEase or generate 14.42% return on investment over 90 days.

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

NetEase  vs.  ATT Inc

NetEase

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, NetEase unveiled solid returns over the last few months and may actually be approaching a breakup point.

ATT Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ATT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NetEase and ATT

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

The idea behind NetEase and ATT 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.