Correlation Between InfoBank and THiRA UTECH

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

By analyzing existing cross correlation between InfoBank and THiRA UTECH LTD, you can compare the effects of market volatilities on InfoBank and THiRA UTECH 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 THiRA UTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfoBank and THiRA UTECH.

Diversification Opportunities for InfoBank and THiRA UTECH

-0.57

Correlation Coefficient

InfoBank  THiRA UTECH

Excellent diversification

The 3 months correlation between InfoBank and THiRA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and THiRA UTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THiRA UTECH LTD 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 THiRA UTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THiRA UTECH LTD has no effect on the direction of InfoBank i.e., InfoBank and THiRA UTECH go up and down completely randomly.

Pair Corralation between InfoBank and THiRA UTECH

Assuming the 90 days trading horizon InfoBank is expected to generate 1.44 times more return on investment than THiRA UTECH. However, InfoBank is 1.44 times more volatile than THiRA UTECH LTD. It trades about 0.09 of its potential returns per unit of risk. THiRA UTECH LTD is currently generating about -0.04 per unit of risk. If you would invest  630,715  in InfoBank on October 12, 2024 and sell it today you would earn a total of  148,285  from holding InfoBank or generate 23.51% return on investment over 90 days.

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

InfoBank  vs.  THiRA UTECH LTD

InfoBank

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfoBank sustained solid returns over the last few months and may actually be approaching a breakup point.

THiRA UTECH LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THiRA UTECH LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with InfoBank and THiRA UTECH

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

The idea behind InfoBank and THiRA UTECH LTD 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.