Correlation Between Interflex and Robotis CoLtd

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

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

Diversification Opportunities for Interflex and Robotis CoLtd

0.1

Correlation Coefficient

Interflex  Robotis CoLtd

Average diversification

The 3 months correlation between Interflex and Robotis is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Interflex Co and Robotis CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robotis CoLtd 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 Robotis CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robotis CoLtd has no effect on the direction of Interflex i.e., Interflex and Robotis CoLtd go up and down completely randomly.

Pair Corralation between Interflex and Robotis CoLtd

Assuming the 90 days trading horizon Interflex Co is expected to under-perform the Robotis CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Interflex Co is 1.5 times less risky than Robotis CoLtd. The stock trades about -0.23 of its potential returns per unit of risk. The Robotis CoLtd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,938,000  in Robotis CoLtd on September 3, 2024 and sell it today you would earn a total of  197,000  from holding Robotis CoLtd or generate 10.17% return on investment over 90 days.

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

Interflex Co  vs.  Robotis CoLtd

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Robotis CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Robotis CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Robotis CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interflex and Robotis CoLtd

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

The idea behind Interflex Co and Robotis CoLtd 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.