Correlation Between Intrasense and TronicS Microsystems

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

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

Diversification Opportunities for Intrasense and TronicS Microsystems

0.21

Correlation Coefficient

Intrasense  TronicS Microsystems

Modest diversification

The 3 months correlation between Intrasense and TronicS is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Intrasense and TronicS Microsystems SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TronicS Microsystems and Intrasense 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 Intrasense are associated (or correlated) with TronicS Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TronicS Microsystems has no effect on the direction of Intrasense i.e., Intrasense and TronicS Microsystems go up and down completely randomly.

Pair Corralation between Intrasense and TronicS Microsystems

Assuming the 90 days trading horizon Intrasense is expected to generate 1.24 times more return on investment than TronicS Microsystems. However, Intrasense is 1.24 times more volatile than TronicS Microsystems SA. It trades about -0.01 of its potential returns per unit of risk. TronicS Microsystems SA is currently generating about -0.02 per unit of risk. If you would invest  31.00  in Intrasense on September 3, 2024 and sell it today you would lose (4.00) from holding Intrasense or give up 12.9% of portfolio value over 90 days.

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

Intrasense  vs.  TronicS Microsystems SA

Intrasense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrasense has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Intrasense is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

TronicS Microsystems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TronicS Microsystems SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, TronicS Microsystems is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Intrasense and TronicS Microsystems

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

The idea behind Intrasense and TronicS Microsystems 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.