Correlation Between Mobile Appliance and Innodep

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

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

Diversification Opportunities for Mobile Appliance and Innodep

0.35

Correlation Coefficient

Mobile Appliance  Innodep

Weak diversification

The 3 months correlation between Mobile and Innodep is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Appliance and Innodep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodep and Mobile Appliance 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 Mobile Appliance are associated (or correlated) with Innodep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innodep has no effect on the direction of Mobile Appliance i.e., Mobile Appliance and Innodep go up and down completely randomly.

Pair Corralation between Mobile Appliance and Innodep

Assuming the 90 days trading horizon Mobile Appliance is expected to generate 1.29 times more return on investment than Innodep. However, Mobile Appliance is 1.29 times more volatile than Innodep. It trades about 0.26 of its potential returns per unit of risk. Innodep is currently generating about -0.13 per unit of risk. If you would invest  205,500  in Mobile Appliance on October 24, 2024 and sell it today you would earn a total of  22,500  from holding Mobile Appliance or generate 10.95% return on investment over 90 days.

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

Mobile Appliance  vs.  Innodep

Mobile Appliance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mobile Appliance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mobile Appliance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Innodep

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mobile Appliance and Innodep

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

The idea behind Mobile Appliance and Innodep 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.