Correlation Between InnoTherapy and Samlip General

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

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

Diversification Opportunities for InnoTherapy and Samlip General

0.35

Correlation Coefficient

InnoTherapy  Samlip General

Weak diversification

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

Pair Corralation between InnoTherapy and Samlip General

Assuming the 90 days trading horizon InnoTherapy is expected to generate 0.97 times more return on investment than Samlip General. However, InnoTherapy is 1.03 times less risky than Samlip General. It trades about 0.16 of its potential returns per unit of risk. Samlip General Foods is currently generating about 0.08 per unit of risk. If you would invest  848,000  in InnoTherapy on October 25, 2024 and sell it today you would earn a total of  108,000  from holding InnoTherapy or generate 12.74% return on investment over 90 days.

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

InnoTherapy  vs.  Samlip General Foods

InnoTherapy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InnoTherapy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InnoTherapy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Samlip General Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samlip General Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samlip General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with InnoTherapy and Samlip General

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

The idea behind InnoTherapy and Samlip General Foods 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.