Correlation Between Analyst IMS and Sure Tech

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

By analyzing existing cross correlation between Analyst IMS Investment and Sure Tech Investments LP, you can compare the effects of market volatilities on Analyst IMS and Sure Tech 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 Analyst IMS with a short position of Sure Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analyst IMS and Sure Tech.

Diversification Opportunities for Analyst IMS and Sure Tech

-0.13

Correlation Coefficient

Analyst IMS  Sure Tech

Good diversification

The 3 months correlation between Analyst and Sure is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Analyst IMS Investment and Sure Tech Investments LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sure Tech Investments and Analyst IMS 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 Analyst IMS Investment are associated (or correlated) with Sure Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sure Tech Investments has no effect on the direction of Analyst IMS i.e., Analyst IMS and Sure Tech go up and down completely randomly.

Pair Corralation between Analyst IMS and Sure Tech

Assuming the 90 days trading horizon Analyst IMS is expected to generate 1.06 times less return on investment than Sure Tech. But when comparing it to its historical volatility, Analyst IMS Investment is 2.19 times less risky than Sure Tech. It trades about 0.44 of its potential returns per unit of risk. Sure Tech Investments LP is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  50,800  in Sure Tech Investments LP on September 20, 2024 and sell it today you would earn a total of  17,570  from holding Sure Tech Investments LP or generate 34.59% return on investment over 90 days.

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

Analyst IMS Investment  vs.  Sure Tech Investments LP

Analyst IMS Investment

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Analyst IMS Investment are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Analyst IMS sustained solid returns over the last few months and may actually be approaching a breakup point.

Sure Tech Investments

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sure Tech Investments LP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sure Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analyst IMS and Sure Tech

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

The idea behind Analyst IMS Investment and Sure Tech Investments LP 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.