Correlation Between Indra A and Tier1 Technology

Can any of the company-specific risk be diversified away by investing in both Indra A and Tier1 Technology 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 Tier1 Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indra A and Tier1 Technology SA, you can compare the effects of market volatilities on Indra A and Tier1 Technology 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 Tier1 Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indra A and Tier1 Technology.

Diversification Opportunities for Indra A and Tier1 Technology

0.0

Correlation Coefficient

Indra A  Tier1 Technology

Pay attention - limited upside

The 3 months correlation between Indra and Tier1 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indra A and Tier1 Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tier1 Technology 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 Tier1 Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tier1 Technology has no effect on the direction of Indra A i.e., Indra A and Tier1 Technology go up and down completely randomly.

Pair Corralation between Indra A and Tier1 Technology

Assuming the 90 days trading horizon Indra A is expected to generate 6.05 times less return on investment than Tier1 Technology. But when comparing it to its historical volatility, Indra A is 1.73 times less risky than Tier1 Technology. It trades about 0.03 of its potential returns per unit of risk. Tier1 Technology SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  256.00  in Tier1 Technology SA on September 12, 2024 and sell it today you would earn a total of  42.00  from holding Tier1 Technology SA or generate 16.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Indra A  vs.  Tier1 Technology SA

Indra A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indra A are ranked lower than 2 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Tier1 Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tier1 Technology SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Tier1 Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indra A and Tier1 Technology

The main advantage of trading using opposite Indra A and Tier1 Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indra A position performs unexpectedly, Tier1 Technology 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 Tier1 Technology will offset losses from the drop in Tier1 Technology's long position.

The idea behind Indra A and Tier1 Technology SA 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 CEOs Directory module to screen CEOs from public companies around the world.