Correlation Between I Tail and SG Capital

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

By analyzing existing cross correlation between i Tail Corp PCL and SG Capital PCL, you can compare the effects of market volatilities on I Tail and SG Capital 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 I Tail with a short position of SG Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Tail and SG Capital.

Diversification Opportunities for I Tail and SG Capital

0.39

Correlation Coefficient

I Tail  SG Capital

Weak diversification

The 3 months correlation between ITC and SGC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding i Tail Corp PCL and SG Capital PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SG Capital PCL and I Tail 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 i Tail Corp PCL are associated (or correlated) with SG Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SG Capital PCL has no effect on the direction of I Tail i.e., I Tail and SG Capital go up and down completely randomly.

Pair Corralation between I Tail and SG Capital

Assuming the 90 days trading horizon i Tail Corp PCL is expected to generate 0.85 times more return on investment than SG Capital. However, i Tail Corp PCL is 1.18 times less risky than SG Capital. It trades about 0.04 of its potential returns per unit of risk. SG Capital PCL is currently generating about -0.16 per unit of risk. If you would invest  2,140  in i Tail Corp PCL on September 25, 2024 and sell it today you would earn a total of  90.00  from holding i Tail Corp PCL or generate 4.21% return on investment over 90 days.

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

i Tail Corp PCL  vs.  SG Capital PCL

i Tail Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in i Tail Corp PCL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, I Tail is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

SG Capital PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SG Capital PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with I Tail and SG Capital

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

The idea behind i Tail Corp PCL and SG Capital PCL 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.