Correlation Between Partron and Innometry

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

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

Diversification Opportunities for Partron and Innometry

-0.35

Correlation Coefficient

Partron  Innometry

Very good diversification

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

Pair Corralation between Partron and Innometry

Assuming the 90 days trading horizon Partron Co is expected to generate 0.42 times more return on investment than Innometry. However, Partron Co is 2.41 times less risky than Innometry. It trades about 0.11 of its potential returns per unit of risk. Innometry Co is currently generating about -0.03 per unit of risk. If you would invest  693,768  in Partron Co on November 28, 2024 and sell it today you would earn a total of  45,232  from holding Partron Co or generate 6.52% return on investment over 90 days.

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

Partron Co  vs.  Innometry Co

Partron

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Partron Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Partron may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Innometry

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Partron and Innometry

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

The idea behind Partron Co and Innometry 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.