Correlation Between InfoBank and Coloray International

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

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

Diversification Opportunities for InfoBank and Coloray International

-0.07

Correlation Coefficient

InfoBank  Coloray International

Good diversification

The 3 months correlation between InfoBank and Coloray is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International 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 Coloray International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloray International has no effect on the direction of InfoBank i.e., InfoBank and Coloray International go up and down completely randomly.

Pair Corralation between InfoBank and Coloray International

Assuming the 90 days trading horizon InfoBank is expected to generate 1.23 times more return on investment than Coloray International. However, InfoBank is 1.23 times more volatile than Coloray International Investment. It trades about 0.03 of its potential returns per unit of risk. Coloray International Investment is currently generating about -0.03 per unit of risk. If you would invest  660,000  in InfoBank on August 31, 2024 and sell it today you would earn a total of  24,000  from holding InfoBank or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

InfoBank  vs.  Coloray International Investme

InfoBank

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfoBank may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Coloray International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coloray International Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Coloray International 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 Coloray International

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

The idea behind InfoBank and Coloray International Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.