Correlation Between Investment Trust and Indian Card

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

By analyzing existing cross correlation between The Investment Trust and Indian Card Clothing, you can compare the effects of market volatilities on Investment Trust and Indian Card 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 Investment Trust with a short position of Indian Card. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Trust and Indian Card.

Diversification Opportunities for Investment Trust and Indian Card

0.09

Correlation Coefficient

Investment Trust  Indian Card

Significant diversification

The 3 months correlation between Investment and Indian is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Investment Trust and Indian Card Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Card Clothing and Investment Trust 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 The Investment Trust are associated (or correlated) with Indian Card. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Card Clothing has no effect on the direction of Investment Trust i.e., Investment Trust and Indian Card go up and down completely randomly.

Pair Corralation between Investment Trust and Indian Card

Assuming the 90 days trading horizon Investment Trust is expected to generate 6.65 times less return on investment than Indian Card. But when comparing it to its historical volatility, The Investment Trust is 1.35 times less risky than Indian Card. It trades about 0.03 of its potential returns per unit of risk. Indian Card Clothing is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  27,610  in Indian Card Clothing on September 22, 2024 and sell it today you would earn a total of  8,590  from holding Indian Card Clothing or generate 31.11% return on investment over 90 days.

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

The Investment Trust  vs.  Indian Card Clothing

Investment Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Investment Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Investment Trust is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Indian Card Clothing

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Card Clothing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Indian Card exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Investment Trust and Indian Card

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

The idea behind The Investment Trust and Indian Card Clothing 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.