Correlation Between Algorand and Inrom Construction

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

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

Diversification Opportunities for Algorand and Inrom Construction

0.14

Correlation Coefficient

Algorand  Inrom Construction

Average diversification

The 3 months correlation between Algorand and Inrom is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Inrom Construction Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inrom Construction and Algorand 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 Algorand are associated (or correlated) with Inrom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inrom Construction has no effect on the direction of Algorand i.e., Algorand and Inrom Construction go up and down completely randomly.

Pair Corralation between Algorand and Inrom Construction

Assuming the 90 days trading horizon Algorand is expected to under-perform the Inrom Construction. In addition to that, Algorand is 2.9 times more volatile than Inrom Construction Industries. It trades about -0.15 of its total potential returns per unit of risk. Inrom Construction Industries is currently generating about -0.06 per unit of volatility. If you would invest  177,800  in Inrom Construction Industries on December 21, 2024 and sell it today you would lose (14,300) from holding Inrom Construction Industries or give up 8.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

Algorand  vs.  Inrom Construction Industries

Algorand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Algorand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Algorand shareholders.

Inrom Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inrom Construction Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Algorand and Inrom Construction

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

The idea behind Algorand and Inrom Construction Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..