Correlation Between InfoBank and Alchera

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

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

Diversification Opportunities for InfoBank and Alchera

0.48

Correlation Coefficient

InfoBank  Alchera

Very weak diversification

The 3 months correlation between InfoBank and Alchera is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and Alchera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchera 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 Alchera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchera has no effect on the direction of InfoBank i.e., InfoBank and Alchera go up and down completely randomly.

Pair Corralation between InfoBank and Alchera

Assuming the 90 days trading horizon InfoBank is expected to generate 0.84 times more return on investment than Alchera. However, InfoBank is 1.19 times less risky than Alchera. It trades about -0.01 of its potential returns per unit of risk. Alchera is currently generating about -0.04 per unit of risk. If you would invest  717,128  in InfoBank on December 1, 2024 and sell it today you would lose (57,128) from holding InfoBank or give up 7.97% of portfolio value over 90 days.

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

InfoBank  vs.  Alchera

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 somewhat strong basic indicators, InfoBank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alchera

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alchera 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 Alchera

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

The idea behind InfoBank and Alchera 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.