Correlation Between INC Research and Painreform

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

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

Diversification Opportunities for INC Research and Painreform

-0.23

Correlation Coefficient

INC Research  Painreform

Very good diversification

The 3 months correlation between INC and Painreform is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding INC Research Holdings and Painreform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Painreform and INC Research 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 INC Research Holdings are associated (or correlated) with Painreform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Painreform has no effect on the direction of INC Research i.e., INC Research and Painreform go up and down completely randomly.

Pair Corralation between INC Research and Painreform

Given the investment horizon of 90 days INC Research Holdings is expected to generate 0.37 times more return on investment than Painreform. However, INC Research Holdings is 2.7 times less risky than Painreform. It trades about 0.04 of its potential returns per unit of risk. Painreform is currently generating about -0.05 per unit of risk. If you would invest  123.00  in INC Research Holdings on September 20, 2024 and sell it today you would earn a total of  19.00  from holding INC Research Holdings or generate 15.45% return on investment over 90 days.

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

INC Research Holdings  vs.  Painreform

INC Research Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Painreform

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Painreform are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Painreform showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INC Research and Painreform

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

The idea behind INC Research Holdings and Painreform 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.