Correlation Between Infinitt Healthcare and Ecocab

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

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

Diversification Opportunities for Infinitt Healthcare and Ecocab

0.22

Correlation Coefficient

Infinitt Healthcare  Ecocab

Modest diversification

The 3 months correlation between Infinitt and Ecocab is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Infinitt Healthcare Co and Ecocab Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecocab and Infinitt Healthcare 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 Infinitt Healthcare Co are associated (or correlated) with Ecocab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecocab has no effect on the direction of Infinitt Healthcare i.e., Infinitt Healthcare and Ecocab go up and down completely randomly.

Pair Corralation between Infinitt Healthcare and Ecocab

Assuming the 90 days trading horizon Infinitt Healthcare Co is expected to generate 1.37 times more return on investment than Ecocab. However, Infinitt Healthcare is 1.37 times more volatile than Ecocab Co. It trades about 0.12 of its potential returns per unit of risk. Ecocab Co is currently generating about -0.08 per unit of risk. If you would invest  433,000  in Infinitt Healthcare Co on December 2, 2024 and sell it today you would earn a total of  132,000  from holding Infinitt Healthcare Co or generate 30.48% return on investment over 90 days.

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

Infinitt Healthcare Co  vs.  Ecocab Co

Infinitt Healthcare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infinitt Healthcare Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Infinitt Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Ecocab

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecocab Co 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.

Pair Trading with Infinitt Healthcare and Ecocab

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

The idea behind Infinitt Healthcare Co and Ecocab Co 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.