Correlation Between Interactive Digital and K Way

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

By analyzing existing cross correlation between Interactive Digital Technologies and K Way Information, you can compare the effects of market volatilities on Interactive Digital and K Way 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 Interactive Digital with a short position of K Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interactive Digital and K Way.

Diversification Opportunities for Interactive Digital and K Way

-0.59

Correlation Coefficient

Interactive Digital  K Way

Excellent diversification

The 3 months correlation between Interactive and 5201 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Digital Technologi and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and Interactive Digital 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 Interactive Digital Technologies are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of Interactive Digital i.e., Interactive Digital and K Way go up and down completely randomly.

Pair Corralation between Interactive Digital and K Way

Assuming the 90 days trading horizon Interactive Digital Technologies is expected to generate 0.82 times more return on investment than K Way. However, Interactive Digital Technologies is 1.22 times less risky than K Way. It trades about -0.01 of its potential returns per unit of risk. K Way Information is currently generating about -0.07 per unit of risk. If you would invest  8,550  in Interactive Digital Technologies on August 31, 2024 and sell it today you would lose (70.00) from holding Interactive Digital Technologies or give up 0.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Interactive Digital Technologi  vs.  K Way Information

Interactive Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interactive Digital Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Interactive Digital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

K Way Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K Way Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, K Way is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Interactive Digital and K Way

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

The idea behind Interactive Digital Technologies and K Way Information 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.