Correlation Between Itay Financial and Batm Advanced

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

By analyzing existing cross correlation between Itay Financial AA and Batm Advanced Communications, you can compare the effects of market volatilities on Itay Financial and Batm Advanced 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 Itay Financial with a short position of Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itay Financial and Batm Advanced.

Diversification Opportunities for Itay Financial and Batm Advanced

-0.69

Correlation Coefficient

Itay Financial  Batm Advanced

Excellent diversification

The 3 months correlation between Itay and Batm is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun and Itay Financial 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 Itay Financial AA are associated (or correlated) with Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Itay Financial i.e., Itay Financial and Batm Advanced go up and down completely randomly.

Pair Corralation between Itay Financial and Batm Advanced

Assuming the 90 days trading horizon Itay Financial AA is expected to generate 1.3 times more return on investment than Batm Advanced. However, Itay Financial is 1.3 times more volatile than Batm Advanced Communications. It trades about 0.36 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.1 per unit of risk. If you would invest  33,140  in Itay Financial AA on September 25, 2024 and sell it today you would earn a total of  6,860  from holding Itay Financial AA or generate 20.7% return on investment over 90 days.

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

Itay Financial AA  vs.  Batm Advanced Communications

Itay Financial AA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Itay Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Batm Advanced Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batm Advanced Communications 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Itay Financial and Batm Advanced

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

The idea behind Itay Financial AA and Batm Advanced Communications 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.