Correlation Between INtRON Biotechnology and Coloray International

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

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

Diversification Opportunities for INtRON Biotechnology and Coloray International

0.46

Correlation Coefficient

INtRON Biotechnology  Coloray International

Very weak diversification

The 3 months correlation between INtRON and Coloray is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding iNtRON Biotechnology and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International and INtRON Biotechnology 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 iNtRON Biotechnology 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 INtRON Biotechnology i.e., INtRON Biotechnology and Coloray International go up and down completely randomly.

Pair Corralation between INtRON Biotechnology and Coloray International

Assuming the 90 days trading horizon iNtRON Biotechnology is expected to generate about the same return on investment as Coloray International Investment. But, iNtRON Biotechnology is 1.76 times less risky than Coloray International. It trades about -0.07 of its potential returns per unit of risk. Coloray International Investment is currently generating about -0.04 per unit of risk. If you would invest  65,300  in Coloray International Investment on September 4, 2024 and sell it today you would lose (6,900) from holding Coloray International Investment or give up 10.57% of portfolio value over 90 days.

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

iNtRON Biotechnology  vs.  Coloray International Investme

iNtRON Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iNtRON Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with INtRON Biotechnology and Coloray International

The main advantage of trading using opposite INtRON Biotechnology and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INtRON Biotechnology 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 iNtRON Biotechnology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.