Correlation Between Infomedia and Collins Foods

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

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

Diversification Opportunities for Infomedia and Collins Foods

0.32

Correlation Coefficient

Infomedia  Collins Foods

Weak diversification

The 3 months correlation between Infomedia and Collins is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and Infomedia 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 Infomedia are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Infomedia i.e., Infomedia and Collins Foods go up and down completely randomly.

Pair Corralation between Infomedia and Collins Foods

Assuming the 90 days trading horizon Infomedia is expected to under-perform the Collins Foods. In addition to that, Infomedia is 1.94 times more volatile than Collins Foods. It trades about -0.09 of its total potential returns per unit of risk. Collins Foods is currently generating about -0.16 per unit of volatility. If you would invest  827.00  in Collins Foods on September 24, 2024 and sell it today you would lose (107.00) from holding Collins Foods or give up 12.94% of portfolio value over 90 days.

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

Infomedia  vs.  Collins Foods

Infomedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Infomedia and Collins Foods

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

The idea behind Infomedia and Collins Foods 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.