Correlation Between Infomedia Press and Suzlon Energy

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

By analyzing existing cross correlation between Infomedia Press Limited and Suzlon Energy Limited, you can compare the effects of market volatilities on Infomedia Press and Suzlon Energy 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 Infomedia Press with a short position of Suzlon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infomedia Press and Suzlon Energy.

Diversification Opportunities for Infomedia Press and Suzlon Energy

0.5

Correlation Coefficient

Infomedia Press  Suzlon Energy

Very weak diversification

The 3 months correlation between Infomedia and Suzlon is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia Press Limited and Suzlon Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzlon Energy Limited and Infomedia Press 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 Infomedia Press Limited are associated (or correlated) with Suzlon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzlon Energy Limited has no effect on the direction of Infomedia Press i.e., Infomedia Press and Suzlon Energy go up and down completely randomly.

Pair Corralation between Infomedia Press and Suzlon Energy

Assuming the 90 days trading horizon Infomedia Press Limited is expected to generate 1.65 times more return on investment than Suzlon Energy. However, Infomedia Press is 1.65 times more volatile than Suzlon Energy Limited. It trades about 0.29 of its potential returns per unit of risk. Suzlon Energy Limited is currently generating about 0.33 per unit of risk. If you would invest  628.00  in Infomedia Press Limited on September 18, 2024 and sell it today you would earn a total of  155.00  from holding Infomedia Press Limited or generate 24.68% return on investment over 90 days.

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

Infomedia Press Limited  vs.  Suzlon Energy Limited

Infomedia Press

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Infomedia Press Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Infomedia Press may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Suzlon Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzlon Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential 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.

Pair Trading with Infomedia Press and Suzlon Energy

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

The idea behind Infomedia Press Limited and Suzlon Energy Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.