Correlation Between Interflex and DAEA TI

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

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

Diversification Opportunities for Interflex and DAEA TI

-0.25

Correlation Coefficient

Interflex  DAEA TI

Very good diversification

The 3 months correlation between Interflex and DAEA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Interflex Co and DAEA TI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEA TI and Interflex 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 Interflex Co are associated (or correlated) with DAEA TI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEA TI has no effect on the direction of Interflex i.e., Interflex and DAEA TI go up and down completely randomly.

Pair Corralation between Interflex and DAEA TI

Assuming the 90 days trading horizon Interflex Co is expected to under-perform the DAEA TI. But the stock apears to be less risky and, when comparing its historical volatility, Interflex Co is 1.61 times less risky than DAEA TI. The stock trades about -0.33 of its potential returns per unit of risk. The DAEA TI Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  267,000  in DAEA TI Co on September 1, 2024 and sell it today you would earn a total of  9,500  from holding DAEA TI Co or generate 3.56% return on investment over 90 days.

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

Interflex Co  vs.  DAEA TI Co

Interflex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interflex Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

DAEA TI

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Interflex and DAEA TI

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

The idea behind Interflex Co and DAEA TI 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 Transaction History module to view history of all your transactions and understand their impact on performance.