Correlation Between Imed Infinity and Value Capital

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

Diversification Opportunities for Imed Infinity and Value Capital

0.65

Correlation Coefficient

Imed Infinity  Value Capital

Poor diversification

The 3 months correlation between Imed and Value is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Imed Infinity Medical Limited and Value Capital One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Capital One 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 Value Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Capital One has no effect on the direction of Imed Infinity i.e., Imed Infinity and Value Capital go up and down completely randomly.

Pair Corralation between Imed Infinity and Value Capital

Assuming the 90 days trading horizon Imed Infinity Medical Limited is expected to under-perform the Value Capital. But the stock apears to be less risky and, when comparing its historical volatility, Imed Infinity Medical Limited is 1.64 times less risky than Value Capital. The stock trades about -0.05 of its potential returns per unit of risk. The Value Capital One is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,080  in Value Capital One on September 30, 2024 and sell it today you would earn a total of  80.00  from holding Value Capital One or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.87%
Values	Daily Returns

Imed Infinity Medical Limited  vs.  Value Capital One

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 somewhat strong basic indicators, Imed Infinity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Value Capital One

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Value Capital One are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Value Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Imed Infinity and Value Capital

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

The idea behind Imed Infinity Medical Limited and Value Capital One 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.