Correlation Between Imed Infinity and B Communications

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

By analyzing existing cross correlation between Imed Infinity Medical Limited and B Communications, you can compare the effects of market volatilities on Imed Infinity and B Communications 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 Imed Infinity with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imed Infinity and B Communications.

Diversification Opportunities for Imed Infinity and B Communications

-0.63

Correlation Coefficient

Imed Infinity  B Communications

Excellent diversification

The 3 months correlation between Imed and BCOM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Imed Infinity Medical Limited and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Imed Infinity 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 Imed Infinity Medical Limited are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Imed Infinity i.e., Imed Infinity and B Communications go up and down completely randomly.

Pair Corralation between Imed Infinity and B Communications

Assuming the 90 days trading horizon Imed Infinity Medical Limited is expected to under-perform the B Communications. But the stock apears to be less risky and, when comparing its historical volatility, Imed Infinity Medical Limited is 1.83 times less risky than B Communications. The stock trades about -0.07 of its potential returns per unit of risk. The B Communications is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  110,200  in B Communications on September 15, 2024 and sell it today you would earn a total of  66,900  from holding B Communications or generate 60.71% return on investment over 90 days.

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

Imed Infinity Medical Limited  vs.  B Communications

Imed Infinity Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imed Infinity Medical Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

B Communications

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imed Infinity and B Communications

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

The idea behind Imed Infinity Medical Limited and B Communications 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.