Correlation Between InfoBank and PlayD Co

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

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

Diversification Opportunities for InfoBank and PlayD Co

-0.03

Correlation Coefficient

InfoBank  PlayD Co

Good diversification

The 3 months correlation between InfoBank and PlayD is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and PlayD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayD Co and InfoBank 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 InfoBank are associated (or correlated) with PlayD Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayD Co has no effect on the direction of InfoBank i.e., InfoBank and PlayD Co go up and down completely randomly.

Pair Corralation between InfoBank and PlayD Co

Assuming the 90 days trading horizon InfoBank is expected to generate 2.8 times more return on investment than PlayD Co. However, InfoBank is 2.8 times more volatile than PlayD Co. It trades about 0.09 of its potential returns per unit of risk. PlayD Co is currently generating about -0.11 per unit of risk. If you would invest  701,236  in InfoBank on September 29, 2024 and sell it today you would earn a total of  57,764  from holding InfoBank or generate 8.24% return on investment over 90 days.

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

InfoBank  vs.  PlayD Co

InfoBank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfoBank sustained solid returns over the last few months and may actually be approaching a breakup point.

PlayD Co

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with InfoBank and PlayD Co

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

The idea behind InfoBank and PlayD Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.