Correlation Between Collins Foods and Infomedia

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

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

Diversification Opportunities for Collins Foods and Infomedia

0.32

Correlation Coefficient

Collins Foods  Infomedia

Weak diversification

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

Pair Corralation between Collins Foods and Infomedia

Assuming the 90 days trading horizon Collins Foods is expected to generate 0.52 times more return on investment than Infomedia. However, Collins Foods is 1.94 times less risky than Infomedia. It trades about -0.16 of its potential returns per unit of risk. Infomedia is currently generating about -0.09 per unit of risk. If you would invest  827.00  in Collins Foods on September 24, 2024 and sell it today you would lose (107.00) from holding Collins Foods or give up 12.94% of portfolio value over 90 days.

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

Collins Foods  vs.  Infomedia

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Infomedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Collins Foods and Infomedia

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

The idea behind Collins Foods and Infomedia 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.