Correlation Between Intouch Holdings and Digital Telecommunicatio

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

By analyzing existing cross correlation between Intouch Holdings Public and Digital Telecommunications Infrastructure, you can compare the effects of market volatilities on Intouch Holdings and Digital Telecommunicatio 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 Intouch Holdings with a short position of Digital Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intouch Holdings and Digital Telecommunicatio.

Diversification Opportunities for Intouch Holdings and Digital Telecommunicatio

0.49

Correlation Coefficient

Intouch Holdings  Digital Telecommunicatio

Very weak diversification

The 3 months correlation between Intouch and Digital is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Holdings Public and Digital Telecommunications Inf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Telecommunicatio and Intouch Holdings 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 Intouch Holdings Public are associated (or correlated) with Digital Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Telecommunicatio has no effect on the direction of Intouch Holdings i.e., Intouch Holdings and Digital Telecommunicatio go up and down completely randomly.

Pair Corralation between Intouch Holdings and Digital Telecommunicatio

Assuming the 90 days trading horizon Intouch Holdings Public is expected to under-perform the Digital Telecommunicatio. In addition to that, Intouch Holdings is 2.67 times more volatile than Digital Telecommunications Infrastructure. It trades about -0.09 of its total potential returns per unit of risk. Digital Telecommunications Infrastructure is currently generating about -0.13 per unit of volatility. If you would invest  917.00  in Digital Telecommunications Infrastructure on September 5, 2024 and sell it today you would lose (22.00) from holding Digital Telecommunications Infrastructure or give up 2.4% of portfolio value over 90 days.

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

Intouch Holdings Public  vs.  Digital Telecommunications Inf

Intouch Holdings Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intouch Holdings Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intouch Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Digital Telecommunicatio

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Telecommunications Infrastructure are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Digital Telecommunicatio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intouch Holdings and Digital Telecommunicatio

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

The idea behind Intouch Holdings Public and Digital Telecommunications Infrastructure 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.