Correlation Between IT Link and Aubay Socit

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

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

Diversification Opportunities for IT Link and Aubay Socit

-0.12

Correlation Coefficient

IT Link  Aubay Socit

Good diversification

The 3 months correlation between ALITL and Aubay is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding IT Link and Aubay Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aubay Socit Anonyme and IT Link 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 IT Link are associated (or correlated) with Aubay Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aubay Socit Anonyme has no effect on the direction of IT Link i.e., IT Link and Aubay Socit go up and down completely randomly.

Pair Corralation between IT Link and Aubay Socit

Assuming the 90 days trading horizon IT Link is expected to generate 1.6 times more return on investment than Aubay Socit. However, IT Link is 1.6 times more volatile than Aubay Socit Anonyme. It trades about 0.02 of its potential returns per unit of risk. Aubay Socit Anonyme is currently generating about 0.01 per unit of risk. If you would invest  2,640  in IT Link on August 31, 2024 and sell it today you would earn a total of  10.00  from holding IT Link or generate 0.38% return on investment over 90 days.

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

IT Link  vs.  Aubay Socit Anonyme

IT Link

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aubay Socit Anonyme

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aubay Socit Anonyme are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Aubay Socit sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IT Link and Aubay Socit

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

The idea behind IT Link and Aubay Socit Anonyme 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.