Correlation Between Inrom Construction and Carasso

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

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

Diversification Opportunities for Inrom Construction and Carasso

0.92

Correlation Coefficient

Inrom Construction  Carasso

Almost no diversification

The 3 months correlation between Inrom and Carasso is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Inrom Construction Industries and Carasso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carasso and Inrom Construction 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 Inrom Construction Industries are associated (or correlated) with Carasso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carasso has no effect on the direction of Inrom Construction i.e., Inrom Construction and Carasso go up and down completely randomly.

Pair Corralation between Inrom Construction and Carasso

Assuming the 90 days trading horizon Inrom Construction Industries is expected to generate 1.06 times more return on investment than Carasso. However, Inrom Construction is 1.06 times more volatile than Carasso. It trades about 0.4 of its potential returns per unit of risk. Carasso is currently generating about 0.33 per unit of risk. If you would invest  121,545  in Inrom Construction Industries on September 14, 2024 and sell it today you would earn a total of  50,855  from holding Inrom Construction Industries or generate 41.84% return on investment over 90 days.

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

Inrom Construction Industries  vs.  Carasso

Inrom Construction

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Inrom Construction Industries are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inrom Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Carasso

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Carasso are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carasso sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inrom Construction and Carasso

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

The idea behind Inrom Construction Industries and Carasso 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.