Correlation Between Descartes Systems and Intermap Technologies

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

By analyzing existing cross correlation between Descartes Systems Group and Intermap Technologies Corp, you can compare the effects of market volatilities on Descartes Systems and Intermap Technologies 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 Descartes Systems with a short position of Intermap Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Descartes Systems and Intermap Technologies.

Diversification Opportunities for Descartes Systems and Intermap Technologies

0.89

Correlation Coefficient

Descartes Systems  Intermap Technologies

Very poor diversification

The 3 months correlation between Descartes and Intermap is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Descartes Systems Group and Intermap Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermap Technologies and Descartes Systems 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 Descartes Systems Group are associated (or correlated) with Intermap Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermap Technologies has no effect on the direction of Descartes Systems i.e., Descartes Systems and Intermap Technologies go up and down completely randomly.

Pair Corralation between Descartes Systems and Intermap Technologies

Assuming the 90 days trading horizon Descartes Systems is expected to generate 4.91 times less return on investment than Intermap Technologies. But when comparing it to its historical volatility, Descartes Systems Group is 3.83 times less risky than Intermap Technologies. It trades about 0.25 of its potential returns per unit of risk. Intermap Technologies Corp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Intermap Technologies Corp on September 15, 2024 and sell it today you would earn a total of  151.00  from holding Intermap Technologies Corp or generate 188.75% return on investment over 90 days.

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

Descartes Systems Group  vs.  Intermap Technologies Corp

Descartes Systems

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Descartes Systems Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Descartes Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Intermap Technologies

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intermap Technologies Corp are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Intermap Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Descartes Systems and Intermap Technologies

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

The idea behind Descartes Systems Group and Intermap Technologies Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.