Correlation Between INFINITT Healthcare and Ecoplastic

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

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

Diversification Opportunities for INFINITT Healthcare and Ecoplastic

-0.12

Correlation Coefficient

INFINITT Healthcare  Ecoplastic

Good diversification

The 3 months correlation between INFINITT and Ecoplastic is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding INFINITT Healthcare Co and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic and INFINITT Healthcare 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 INFINITT Healthcare Co are associated (or correlated) with Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of INFINITT Healthcare i.e., INFINITT Healthcare and Ecoplastic go up and down completely randomly.

Pair Corralation between INFINITT Healthcare and Ecoplastic

Assuming the 90 days trading horizon INFINITT Healthcare Co is expected to generate 0.69 times more return on investment than Ecoplastic. However, INFINITT Healthcare Co is 1.46 times less risky than Ecoplastic. It trades about 0.02 of its potential returns per unit of risk. Ecoplastic is currently generating about -0.14 per unit of risk. If you would invest  426,500  in INFINITT Healthcare Co on September 14, 2024 and sell it today you would earn a total of  3,500  from holding INFINITT Healthcare Co or generate 0.82% return on investment over 90 days.

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

INFINITT Healthcare Co  vs.  Ecoplastic

INFINITT Healthcare

Risk-Adjusted Performance

1 of 100

Very Weak

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

Ecoplastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecoplastic 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.

Pair Trading with INFINITT Healthcare and Ecoplastic

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

The idea behind INFINITT Healthcare Co and Ecoplastic 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.