Correlation Between Imed Infinity and Identi Healthcare

Can any of the company-specific risk be diversified away by investing in both Imed Infinity and Identi Healthcare 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 Identi Healthcare 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 Identi Healthcare, you can compare the effects of market volatilities on Imed Infinity and Identi Healthcare 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 Identi Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imed Infinity and Identi Healthcare.

Diversification Opportunities for Imed Infinity and Identi Healthcare

0.81

Correlation Coefficient

Imed Infinity  Identi Healthcare

Very poor diversification

The 3 months correlation between Imed and Identi is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Imed Infinity Medical Limited and Identi Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identi Healthcare 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 Identi Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identi Healthcare has no effect on the direction of Imed Infinity i.e., Imed Infinity and Identi Healthcare go up and down completely randomly.

Pair Corralation between Imed Infinity and Identi Healthcare

Assuming the 90 days trading horizon Imed Infinity Medical Limited is expected to under-perform the Identi Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Imed Infinity Medical Limited is 3.2 times less risky than Identi Healthcare. The stock trades about -0.17 of its potential returns per unit of risk. The Identi Healthcare is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  16,330  in Identi Healthcare on September 21, 2024 and sell it today you would earn a total of  1,310  from holding Identi Healthcare or generate 8.02% return on investment over 90 days.

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

Imed Infinity Medical Limited  vs.  Identi Healthcare

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Identi Healthcare

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Identi Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Identi Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imed Infinity and Identi Healthcare

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

The idea behind Imed Infinity Medical Limited and Identi Healthcare 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.