Correlation Between Global Power and Intouch Holdings

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

By analyzing existing cross correlation between Global Power Synergy and Intouch Holdings Public, you can compare the effects of market volatilities on Global Power and Intouch Holdings 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 Global Power with a short position of Intouch Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Power and Intouch Holdings.

Diversification Opportunities for Global Power and Intouch Holdings

-0.1

Correlation Coefficient

Global Power  Intouch Holdings

Good diversification

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

Pair Corralation between Global Power and Intouch Holdings

Assuming the 90 days trading horizon Global Power Synergy is expected to under-perform the Intouch Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Global Power Synergy is 1.09 times less risky than Intouch Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Intouch Holdings Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,225  in Intouch Holdings Public on September 25, 2024 and sell it today you would earn a total of  550.00  from holding Intouch Holdings Public or generate 5.96% return on investment over 90 days.

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

Global Power Synergy  vs.  Intouch Holdings Public

Global Power Synergy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Power Synergy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Intouch Holdings Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intouch Holdings Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Intouch Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Power and Intouch Holdings

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

The idea behind Global Power Synergy and Intouch Holdings Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.