Correlation Between Innowireless and InfoBank

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

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

Diversification Opportunities for Innowireless and InfoBank

0.65

Correlation Coefficient

Innowireless  InfoBank

Poor diversification

The 3 months correlation between Innowireless and InfoBank is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless Co and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and Innowireless 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 Innowireless Co 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 Innowireless i.e., Innowireless and InfoBank go up and down completely randomly.

Pair Corralation between Innowireless and InfoBank

Assuming the 90 days trading horizon Innowireless Co is expected to generate 0.52 times more return on investment than InfoBank. However, Innowireless Co is 1.93 times less risky than InfoBank. It trades about 0.17 of its potential returns per unit of risk. InfoBank is currently generating about 0.06 per unit of risk. If you would invest  1,645,000  in Innowireless Co on September 28, 2024 and sell it today you would earn a total of  455,000  from holding Innowireless Co or generate 27.66% return on investment over 90 days.

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

Innowireless Co  vs.  InfoBank

Innowireless

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innowireless Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Innowireless sustained solid returns over the last few months and may actually be approaching a breakup point.

InfoBank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 4 (%) 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 Innowireless and InfoBank

The main advantage of trading using opposite Innowireless and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless 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 Innowireless Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..