Correlation Between United States and Inno Holdings

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

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

Diversification Opportunities for United States and Inno Holdings

-0.14

Correlation Coefficient

United States  Inno Holdings

Good diversification

The 3 months correlation between United and Inno is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Inno Holdings Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inno Holdings Common and United States 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 United States Steel are associated (or correlated) with Inno Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inno Holdings Common has no effect on the direction of United States i.e., United States and Inno Holdings go up and down completely randomly.

Pair Corralation between United States and Inno Holdings

Taking into account the 90-day investment horizon United States is expected to generate 3.3 times less return on investment than Inno Holdings. But when comparing it to its historical volatility, United States Steel is 3.16 times less risky than Inno Holdings. It trades about 0.08 of its potential returns per unit of risk. Inno Holdings Common is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Inno Holdings Common on September 2, 2024 and sell it today you would earn a total of  91.00  from holding Inno Holdings Common or generate 22.75% return on investment over 90 days.

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

United States Steel  vs.  Inno Holdings Common

United States Steel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, United States showed solid returns over the last few months and may actually be approaching a breakup point.

Inno Holdings Common

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inno Holdings Common are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Inno Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United States and Inno Holdings

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

The idea behind United States Steel and Inno Holdings Common 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.