Correlation Between Robotis CoLtd and Interflex

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

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

Diversification Opportunities for Robotis CoLtd and Interflex

0.1

Correlation Coefficient

Robotis CoLtd  Interflex

Average diversification

The 3 months correlation between Robotis and Interflex is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Robotis CoLtd and Interflex Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interflex and Robotis CoLtd 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 Robotis CoLtd 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 Robotis CoLtd i.e., Robotis CoLtd and Interflex go up and down completely randomly.

Pair Corralation between Robotis CoLtd and Interflex

Assuming the 90 days trading horizon Robotis CoLtd is expected to generate 2.28 times more return on investment than Interflex. However, Robotis CoLtd is 2.28 times more volatile than Interflex Co. It trades about 0.21 of its potential returns per unit of risk. Interflex Co is currently generating about -0.33 per unit of risk. If you would invest  1,795,000  in Robotis CoLtd on September 1, 2024 and sell it today you would earn a total of  385,000  from holding Robotis CoLtd or generate 21.45% return on investment over 90 days.

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

Robotis CoLtd  vs.  Interflex Co

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.

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.

Pair Trading with Robotis CoLtd and Interflex

The main advantage of trading using opposite Robotis CoLtd and Interflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Robotis CoLtd 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 Robotis CoLtd 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.