Correlation Between Infortrend Technology and Zinwell

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

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

Diversification Opportunities for Infortrend Technology and Zinwell

0.42

Correlation Coefficient

Infortrend Technology  Zinwell

Very weak diversification

The 3 months correlation between Infortrend and Zinwell is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Infortrend Technology and Zinwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinwell and Infortrend Technology 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 Infortrend Technology are associated (or correlated) with Zinwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinwell has no effect on the direction of Infortrend Technology i.e., Infortrend Technology and Zinwell go up and down completely randomly.

Pair Corralation between Infortrend Technology and Zinwell

Assuming the 90 days trading horizon Infortrend Technology is expected to generate 1.4 times more return on investment than Zinwell. However, Infortrend Technology is 1.4 times more volatile than Zinwell. It trades about -0.15 of its potential returns per unit of risk. Zinwell is currently generating about -0.22 per unit of risk. If you would invest  3,495  in Infortrend Technology on October 1, 2024 and sell it today you would lose (220.00) from holding Infortrend Technology or give up 6.29% of portfolio value over 90 days.

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

Infortrend Technology  vs.  Zinwell

Infortrend Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infortrend Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Infortrend Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Zinwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Infortrend Technology and Zinwell

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

The idea behind Infortrend Technology and Zinwell 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.