Correlation Between Intops and Interflex
Can any of the company-specific risk be diversified away by investing in both Intops and Interflex 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 Intops and Interflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intops Co and Interflex Co, you can compare the effects of market volatilities on Intops and Interflex 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 Intops with a short position of Interflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intops and Interflex.
Diversification Opportunities for Intops and Interflex
Almost no diversification
The 3 months correlation between Intops and Interflex is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Intops Co and Interflex Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interflex and Intops 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 Intops Co are associated (or correlated) with Interflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interflex has no effect on the direction of Intops i.e., Intops and Interflex go up and down completely randomly.
Pair Corralation between Intops and Interflex
Assuming the 90 days trading horizon Intops Co is expected to generate 1.2 times more return on investment than Interflex. However, Intops is 1.2 times more volatile than Interflex Co. It trades about -0.19 of its potential returns per unit of risk. Interflex Co is currently generating about -0.25 per unit of risk. If you would invest 2,570,000 in Intops Co on September 1, 2024 and sell it today you would lose (745,000) from holding Intops Co or give up 28.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.33% |
Values | Daily Returns |
Intops Co vs. Interflex Co
Performance |
Timeline |
Intops |
Interflex |
Intops and Interflex Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Intops and Interflex
The main advantage of trading using opposite Intops and Interflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intops position performs unexpectedly, Interflex 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 Interflex will offset losses from the drop in Interflex's long position.The idea behind Intops Co and Interflex 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.Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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