Correlation Between Inter Industries and Ralco Agencies

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

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

Diversification Opportunities for Inter Industries and Ralco Agencies

0.14

Correlation Coefficient

Inter Industries  Ralco Agencies

Average diversification

The 3 months correlation between Inter and Ralco is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Inter Industries and Ralco Agencies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralco Agencies and Inter Industries 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 Inter Industries are associated (or correlated) with Ralco Agencies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralco Agencies has no effect on the direction of Inter Industries i.e., Inter Industries and Ralco Agencies go up and down completely randomly.

Pair Corralation between Inter Industries and Ralco Agencies

Assuming the 90 days trading horizon Inter Industries is expected to generate 5.09 times less return on investment than Ralco Agencies. In addition to that, Inter Industries is 1.1 times more volatile than Ralco Agencies. It trades about 0.05 of its total potential returns per unit of risk. Ralco Agencies is currently generating about 0.27 per unit of volatility. If you would invest  419,000  in Ralco Agencies on September 27, 2024 and sell it today you would earn a total of  55,200  from holding Ralco Agencies or generate 13.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Inter Industries  vs.  Ralco Agencies

Inter Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inter Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Ralco Agencies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ralco Agencies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ralco Agencies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inter Industries and Ralco Agencies

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

The idea behind Inter Industries and Ralco Agencies 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.