Correlation Between MotorCycle Holdings and Infomedia

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

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

Diversification Opportunities for MotorCycle Holdings and Infomedia

-0.25

Correlation Coefficient

MotorCycle Holdings  Infomedia

Very good diversification

The 3 months correlation between MotorCycle and Infomedia is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding MotorCycle Holdings and Infomedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia and MotorCycle 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 MotorCycle Holdings are associated (or correlated) with Infomedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia has no effect on the direction of MotorCycle Holdings i.e., MotorCycle Holdings and Infomedia go up and down completely randomly.

Pair Corralation between MotorCycle Holdings and Infomedia

Assuming the 90 days trading horizon MotorCycle Holdings is expected to generate 0.86 times more return on investment than Infomedia. However, MotorCycle Holdings is 1.16 times less risky than Infomedia. It trades about 0.1 of its potential returns per unit of risk. Infomedia is currently generating about -0.04 per unit of risk. If you would invest  165.00  in MotorCycle Holdings on September 26, 2024 and sell it today you would earn a total of  24.00  from holding MotorCycle Holdings or generate 14.55% return on investment over 90 days.

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

MotorCycle Holdings  vs.  Infomedia

MotorCycle Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MotorCycle Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MotorCycle Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Infomedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Infomedia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MotorCycle Holdings and Infomedia

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

The idea behind MotorCycle Holdings and Infomedia 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.