Correlation Between Total Soft and IM CoLtd

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Can any of the company-specific risk be diversified away by investing in both Total Soft and IM CoLtd 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 Total Soft and IM CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and IM CoLtd, you can compare the effects of market volatilities on Total Soft and IM CoLtd 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 Total Soft with a short position of IM CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and IM CoLtd.

Diversification Opportunities for Total Soft and IM CoLtd

Total101390Diversified AwayTotal101390Diversified Away100%
-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Total and 101390 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd and Total Soft 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 Total Soft Bank are associated (or correlated) with IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of Total Soft i.e., Total Soft and IM CoLtd go up and down completely randomly.

Pair Corralation between Total Soft and IM CoLtd

Assuming the 90 days trading horizon Total Soft Bank is expected to generate 2.29 times more return on investment than IM CoLtd. However, Total Soft is 2.29 times more volatile than IM CoLtd. It trades about 0.15 of its potential returns per unit of risk. IM CoLtd is currently generating about -0.25 per unit of risk. If you would invest  445,500  in Total Soft Bank on November 19, 2024 and sell it today you would earn a total of  365,500  from holding Total Soft Bank or generate 82.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.31%
ValuesDaily Returns

Total Soft Bank  vs.  IM CoLtd

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -60-40-200204060
JavaScript chart by amCharts 3.21.15045340 101390
       Timeline  
Total Soft Bank 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Total Soft Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Total Soft sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4,0006,0008,00010,00012,00014,000
IM CoLtd 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days IM CoLtd 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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1,5002,0002,5003,000

Total Soft and IM CoLtd Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-27.84-20.85-13.86-6.870.07.4314.9822.5330.08 0.0050.0100.0150.0200.025
JavaScript chart by amCharts 3.21.15045340 101390
       Returns  

Pair Trading with Total Soft and IM CoLtd

The main advantage of trading using opposite Total Soft and IM CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft position performs unexpectedly, IM CoLtd 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 IM CoLtd will offset losses from the drop in IM CoLtd's long position.
The idea behind Total Soft Bank and IM CoLtd 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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