Correlation Between INFINITT Healthcare and ChipsMedia

Can any of the company-specific risk be diversified away by investing in both INFINITT Healthcare and ChipsMedia 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 ChipsMedia 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 ChipsMedia, you can compare the effects of market volatilities on INFINITT Healthcare and ChipsMedia 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 ChipsMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFINITT Healthcare and ChipsMedia.

Diversification Opportunities for INFINITT Healthcare and ChipsMedia

0.32

Correlation Coefficient

INFINITT Healthcare  ChipsMedia

Weak diversification

The 3 months correlation between INFINITT and ChipsMedia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding INFINITT Healthcare Co and ChipsMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipsMedia 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 ChipsMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipsMedia has no effect on the direction of INFINITT Healthcare i.e., INFINITT Healthcare and ChipsMedia go up and down completely randomly.

Pair Corralation between INFINITT Healthcare and ChipsMedia

Assuming the 90 days trading horizon INFINITT Healthcare Co is expected to generate 0.59 times more return on investment than ChipsMedia. However, INFINITT Healthcare Co is 1.68 times less risky than ChipsMedia. It trades about 0.01 of its potential returns per unit of risk. ChipsMedia is currently generating about -0.03 per unit of risk. If you would invest  430,000  in INFINITT Healthcare Co on September 12, 2024 and sell it today you would earn a total of  2,500  from holding INFINITT Healthcare Co or generate 0.58% return on investment over 90 days.

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

INFINITT Healthcare Co  vs.  ChipsMedia

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.

ChipsMedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChipsMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ChipsMedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with INFINITT Healthcare and ChipsMedia

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

The idea behind INFINITT Healthcare Co and ChipsMedia 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.