Correlation Between InfoBank and Ecoplastic

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

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

Diversification Opportunities for InfoBank and Ecoplastic

-0.4

Correlation Coefficient

InfoBank  Ecoplastic

Very good diversification

The 3 months correlation between InfoBank and Ecoplastic is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic and InfoBank 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 InfoBank are associated (or correlated) with Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of InfoBank i.e., InfoBank and Ecoplastic go up and down completely randomly.

Pair Corralation between InfoBank and Ecoplastic

Assuming the 90 days trading horizon InfoBank is expected to under-perform the Ecoplastic. In addition to that, InfoBank is 1.21 times more volatile than Ecoplastic. It trades about -0.15 of its total potential returns per unit of risk. Ecoplastic is currently generating about 0.14 per unit of volatility. If you would invest  229,000  in Ecoplastic on December 27, 2024 and sell it today you would earn a total of  37,000  from holding Ecoplastic or generate 16.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

InfoBank  vs.  Ecoplastic

InfoBank

Risk-Adjusted Performance

Very Weak

Over the last 90 days InfoBank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ecoplastic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ecoplastic are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ecoplastic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InfoBank and Ecoplastic

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

The idea behind InfoBank and Ecoplastic 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 Transaction History module to view history of all your transactions and understand their impact on performance.