Correlation Between AUTHUM INVESTMENT and Investment Trust

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

By analyzing existing cross correlation between AUTHUM INVESTMENT INFRASTRUCTU and The Investment Trust, you can compare the effects of market volatilities on AUTHUM INVESTMENT and Investment Trust 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 AUTHUM INVESTMENT with a short position of Investment Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTHUM INVESTMENT and Investment Trust.

Diversification Opportunities for AUTHUM INVESTMENT and Investment Trust

0.1

Correlation Coefficient

AUTHUM INVESTMENT  Investment Trust

Average diversification

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

Pair Corralation between AUTHUM INVESTMENT and Investment Trust

Assuming the 90 days trading horizon AUTHUM INVESTMENT is expected to generate 1.25 times less return on investment than Investment Trust. In addition to that, AUTHUM INVESTMENT is 1.01 times more volatile than The Investment Trust. It trades about 0.08 of its total potential returns per unit of risk. The Investment Trust is currently generating about 0.1 per unit of volatility. If you would invest  18,246  in The Investment Trust on September 12, 2024 and sell it today you would earn a total of  2,897  from holding The Investment Trust or generate 15.88% return on investment over 90 days.

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

AUTHUM INVESTMENT INFRASTRUCTU  vs.  The Investment Trust

AUTHUM INVESTMENT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AUTHUM INVESTMENT INFRASTRUCTU are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, AUTHUM INVESTMENT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Investment Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Investment Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AUTHUM INVESTMENT and Investment Trust

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

The idea behind AUTHUM INVESTMENT INFRASTRUCTU and The Investment Trust 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.