Correlation Between InfoBank and Foodnamoo

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

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

Diversification Opportunities for InfoBank and Foodnamoo

0.12

Correlation Coefficient

InfoBank  Foodnamoo

Average diversification

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

Pair Corralation between InfoBank and Foodnamoo

Assuming the 90 days trading horizon InfoBank is expected to generate 0.74 times more return on investment than Foodnamoo. However, InfoBank is 1.36 times less risky than Foodnamoo. It trades about -0.05 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.06 per unit of risk. If you would invest  1,116,004  in InfoBank on September 14, 2024 and sell it today you would lose (453,004) from holding InfoBank or give up 40.59% of portfolio value over 90 days.

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

InfoBank  vs.  Foodnamoo

InfoBank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, InfoBank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Foodnamoo

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Foodnamoo are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Foodnamoo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with InfoBank and Foodnamoo

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

The idea behind InfoBank and Foodnamoo 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.