Correlation Between GM Breweries and Infomedia Press

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

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

Diversification Opportunities for GM Breweries and Infomedia Press

0.35

Correlation Coefficient

GM Breweries  Infomedia Press

Weak diversification

The 3 months correlation between GMBREW and Infomedia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding GM Breweries Limited and Infomedia Press Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia Press and GM Breweries 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 GM Breweries Limited are associated (or correlated) with Infomedia Press. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia Press has no effect on the direction of GM Breweries i.e., GM Breweries and Infomedia Press go up and down completely randomly.

Pair Corralation between GM Breweries and Infomedia Press

Assuming the 90 days trading horizon GM Breweries is expected to generate 2.33 times less return on investment than Infomedia Press. But when comparing it to its historical volatility, GM Breweries Limited is 2.15 times less risky than Infomedia Press. It trades about 0.18 of its potential returns per unit of risk. Infomedia Press Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  632.00  in Infomedia Press Limited on September 22, 2024 and sell it today you would earn a total of  102.00  from holding Infomedia Press Limited or generate 16.14% return on investment over 90 days.

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

GM Breweries Limited  vs.  Infomedia Press Limited

GM Breweries Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GM Breweries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Infomedia Press

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Infomedia Press Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Infomedia Press may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GM Breweries and Infomedia Press

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

The idea behind GM Breweries Limited and Infomedia Press Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.