Correlation Between Interlink Communication and Rojana Industrial

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

By analyzing existing cross correlation between Interlink Communication Public and Rojana Industrial Park, you can compare the effects of market volatilities on Interlink Communication and Rojana Industrial 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 Interlink Communication with a short position of Rojana Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interlink Communication and Rojana Industrial.

Diversification Opportunities for Interlink Communication and Rojana Industrial

0.6

Correlation Coefficient

Interlink Communication  Rojana Industrial

Poor diversification

The 3 months correlation between Interlink and Rojana is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Interlink Communication Public and Rojana Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rojana Industrial Park and Interlink Communication 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 Interlink Communication Public are associated (or correlated) with Rojana Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rojana Industrial Park has no effect on the direction of Interlink Communication i.e., Interlink Communication and Rojana Industrial go up and down completely randomly.

Pair Corralation between Interlink Communication and Rojana Industrial

Assuming the 90 days trading horizon Interlink Communication is expected to generate 1.5 times less return on investment than Rojana Industrial. But when comparing it to its historical volatility, Interlink Communication Public is 1.23 times less risky than Rojana Industrial. It trades about 0.05 of its potential returns per unit of risk. Rojana Industrial Park is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  590.00  in Rojana Industrial Park on September 3, 2024 and sell it today you would earn a total of  40.00  from holding Rojana Industrial Park or generate 6.78% return on investment over 90 days.

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

Interlink Communication Public  vs.  Rojana Industrial Park

Interlink Communication

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Interlink Communication Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Interlink Communication is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Rojana Industrial Park

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Interlink Communication and Rojana Industrial

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

The idea behind Interlink Communication Public and Rojana Industrial Park 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.