Correlation Between IM Vinaria and Infinity Capital

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

By analyzing existing cross correlation between IM Vinaria Purcari and Infinity Capital Investments, you can compare the effects of market volatilities on IM Vinaria and Infinity Capital 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 IM Vinaria with a short position of Infinity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IM Vinaria and Infinity Capital.

Diversification Opportunities for IM Vinaria and Infinity Capital

0.19

Correlation Coefficient

IM Vinaria  Infinity Capital

Average diversification

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

Pair Corralation between IM Vinaria and Infinity Capital

Assuming the 90 days trading horizon IM Vinaria Purcari is expected to generate 1.09 times more return on investment than Infinity Capital. However, IM Vinaria is 1.09 times more volatile than Infinity Capital Investments. It trades about 0.11 of its potential returns per unit of risk. Infinity Capital Investments is currently generating about 0.07 per unit of risk. If you would invest  783.00  in IM Vinaria Purcari on September 13, 2024 and sell it today you would earn a total of  699.00  from holding IM Vinaria Purcari or generate 89.27% return on investment over 90 days.

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

IM Vinaria Purcari  vs.  Infinity Capital Investments

IM Vinaria Purcari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IM Vinaria Purcari has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IM Vinaria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Infinity Capital Inv

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infinity Capital Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Infinity Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IM Vinaria and Infinity Capital

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

The idea behind IM Vinaria Purcari and Infinity Capital Investments 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.