Correlation Between Inrom Construction and Glassbox

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

Diversification Opportunities for Inrom Construction and Glassbox

-0.16

Correlation Coefficient

Inrom Construction  Glassbox

Good diversification

The 3 months correlation between Inrom and Glassbox is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Inrom Construction Industries and Glassbox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glassbox 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 Glassbox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glassbox has no effect on the direction of Inrom Construction i.e., Inrom Construction and Glassbox go up and down completely randomly.

Pair Corralation between Inrom Construction and Glassbox

Assuming the 90 days trading horizon Inrom Construction Industries is expected to generate 0.39 times more return on investment than Glassbox. However, Inrom Construction Industries is 2.55 times less risky than Glassbox. It trades about 0.38 of its potential returns per unit of risk. Glassbox is currently generating about 0.07 per unit of risk. If you would invest  114,011  in Inrom Construction Industries on September 5, 2024 and sell it today you would earn a total of  51,389  from holding Inrom Construction Industries or generate 45.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.04%
Values	Daily Returns

Inrom Construction Industries  vs.  Glassbox

Inrom Construction

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Inrom Construction Industries are ranked lower than 30 (%) 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.

Glassbox

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Glassbox has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Glassbox sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inrom Construction and Glassbox

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

The idea behind Inrom Construction Industries and Glassbox 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.