Correlation Between Indra A and Bankinter

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

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

Diversification Opportunities for Indra A and Bankinter

0.06

Correlation Coefficient

Indra A  Bankinter

Significant diversification

The 3 months correlation between Indra and Bankinter is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Indra A and Bankinter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter and Indra A 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 Indra A are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter has no effect on the direction of Indra A i.e., Indra A and Bankinter go up and down completely randomly.

Pair Corralation between Indra A and Bankinter

Assuming the 90 days trading horizon Indra A is expected to generate 0.85 times more return on investment than Bankinter. However, Indra A is 1.17 times less risky than Bankinter. It trades about 0.04 of its potential returns per unit of risk. Bankinter is currently generating about -0.01 per unit of risk. If you would invest  1,659  in Indra A on September 14, 2024 and sell it today you would earn a total of  51.00  from holding Indra A or generate 3.07% return on investment over 90 days.

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

Indra A  vs.  Bankinter

Indra A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Indra A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Indra A is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bankinter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bankinter has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bankinter is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Indra A and Bankinter

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

The idea behind Indra A and Bankinter 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.