Correlation Between Innelec Multimedia and Stef SA

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

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

Diversification Opportunities for Innelec Multimedia and Stef SA

0.72

Correlation Coefficient

Innelec Multimedia  Stef SA

Poor diversification

The 3 months correlation between Innelec and Stef is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Innelec Multimedia and Stef SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stef SA and Innelec Multimedia 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 Innelec Multimedia are associated (or correlated) with Stef SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stef SA has no effect on the direction of Innelec Multimedia i.e., Innelec Multimedia and Stef SA go up and down completely randomly.

Pair Corralation between Innelec Multimedia and Stef SA

Assuming the 90 days trading horizon Innelec Multimedia is expected to under-perform the Stef SA. In addition to that, Innelec Multimedia is 2.6 times more volatile than Stef SA. It trades about -0.12 of its total potential returns per unit of risk. Stef SA is currently generating about -0.13 per unit of volatility. If you would invest  13,320  in Stef SA on September 13, 2024 and sell it today you would lose (460.00) from holding Stef SA or give up 3.45% of portfolio value over 90 days.

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

Innelec Multimedia  vs.  Stef SA

Innelec Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innelec Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Stef SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stef SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental 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 Innelec Multimedia and Stef SA

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

The idea behind Innelec Multimedia and Stef SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.