Correlation Between Imeik Technology and Industrial

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

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

Diversification Opportunities for Imeik Technology and Industrial

0.7

Correlation Coefficient

Imeik Technology  Industrial

Poor diversification

The 3 months correlation between Imeik and Industrial is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Imeik Technology Development and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Imeik 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 Imeik Technology Development are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Imeik Technology i.e., Imeik Technology and Industrial go up and down completely randomly.

Pair Corralation between Imeik Technology and Industrial

Assuming the 90 days trading horizon Imeik Technology Development is expected to under-perform the Industrial. In addition to that, Imeik Technology is 2.4 times more volatile than Industrial and Commercial. It trades about -0.03 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.28 per unit of volatility. If you would invest  619.00  in Industrial and Commercial on September 19, 2024 and sell it today you would earn a total of  40.00  from holding Industrial and Commercial or generate 6.46% return on investment over 90 days.

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

Imeik Technology Development  vs.  Industrial and Commercial

Imeik Technology Dev

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Imeik Technology Development are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Imeik Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Industrial and Commercial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imeik Technology and Industrial

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

The idea behind Imeik Technology Development and Industrial and Commercial 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.