Correlation Between Insun Environment and InfoBank

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

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

Diversification Opportunities for Insun Environment and InfoBank

-0.03

Correlation Coefficient

Insun Environment  InfoBank

Good diversification

The 3 months correlation between Insun and InfoBank is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Insun Environment New and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and Insun Environment 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 Insun Environment New are associated (or correlated) with InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Insun Environment i.e., Insun Environment and InfoBank go up and down completely randomly.

Pair Corralation between Insun Environment and InfoBank

Assuming the 90 days trading horizon Insun Environment is expected to generate 1.46 times less return on investment than InfoBank. But when comparing it to its historical volatility, Insun Environment New is 2.13 times less risky than InfoBank. It trades about 0.46 of its potential returns per unit of risk. InfoBank is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  560,194  in InfoBank on October 10, 2024 and sell it today you would earn a total of  221,806  from holding InfoBank or generate 39.59% return on investment over 90 days.

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

Insun Environment New  vs.  InfoBank

Insun Environment New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insun Environment New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Insun Environment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

InfoBank

Risk-Adjusted Performance

7 of 100

OK

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.

Pair Trading with Insun Environment and InfoBank

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

The idea behind Insun Environment New and InfoBank 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..