Correlation Between Rojana Industrial and Interlink Communication

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

By analyzing existing cross correlation between Rojana Industrial Park and Interlink Communication Public, you can compare the effects of market volatilities on Rojana Industrial and Interlink Communication 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 Rojana Industrial with a short position of Interlink Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rojana Industrial and Interlink Communication.

Diversification Opportunities for Rojana Industrial and Interlink Communication

0.6

Correlation Coefficient

Rojana Industrial  Interlink Communication

Poor diversification

The 3 months correlation between Rojana and Interlink is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Rojana Industrial Park and Interlink Communication Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interlink Communication and Rojana Industrial 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 Rojana Industrial Park are associated (or correlated) with Interlink Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interlink Communication has no effect on the direction of Rojana Industrial i.e., Rojana Industrial and Interlink Communication go up and down completely randomly.

Pair Corralation between Rojana Industrial and Interlink Communication

Assuming the 90 days trading horizon Rojana Industrial Park is expected to generate 1.23 times more return on investment than Interlink Communication. However, Rojana Industrial is 1.23 times more volatile than Interlink Communication Public. It trades about 0.06 of its potential returns per unit of risk. Interlink Communication Public is currently generating about 0.05 per unit of risk. If you would invest  590.00  in Rojana Industrial Park on September 3, 2024 and sell it today you would earn a total of  40.00  from holding Rojana Industrial Park or generate 6.78% return on investment over 90 days.

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

Rojana Industrial Park  vs.  Interlink Communication Public

Rojana Industrial Park

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rojana Industrial Park are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Rojana Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Interlink Communication

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Interlink Communication Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Interlink Communication is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rojana Industrial and Interlink Communication

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

The idea behind Rojana Industrial Park and Interlink Communication Public 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.