Correlation Between Terminal X and Iargento

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

By analyzing existing cross correlation between Terminal X Online and Iargento Hi Tech, you can compare the effects of market volatilities on Terminal X and Iargento 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 Terminal X with a short position of Iargento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terminal X and Iargento.

Diversification Opportunities for Terminal X and Iargento

-0.19

Correlation Coefficient

Terminal X  Iargento

Good diversification

The 3 months correlation between Terminal and Iargento is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Terminal X Online and Iargento Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iargento Hi Tech and Terminal X 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 Terminal X Online are associated (or correlated) with Iargento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iargento Hi Tech has no effect on the direction of Terminal X i.e., Terminal X and Iargento go up and down completely randomly.

Pair Corralation between Terminal X and Iargento

Assuming the 90 days trading horizon Terminal X Online is expected to generate 0.58 times more return on investment than Iargento. However, Terminal X Online is 1.72 times less risky than Iargento. It trades about 0.57 of its potential returns per unit of risk. Iargento Hi Tech is currently generating about -0.02 per unit of risk. If you would invest  31,360  in Terminal X Online on September 14, 2024 and sell it today you would earn a total of  18,550  from holding Terminal X Online or generate 59.15% return on investment over 90 days.

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

Terminal X Online  vs.  Iargento Hi Tech

Terminal X Online

Risk-Adjusted Performance

45 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Terminal X Online are ranked lower than 45 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Terminal X sustained solid returns over the last few months and may actually be approaching a breakup point.

Iargento Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iargento Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iargento is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Terminal X and Iargento

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

The idea behind Terminal X Online and Iargento Hi Tech 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .