Correlation Between Confluent and Internet Infinity

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

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

Diversification Opportunities for Confluent and Internet Infinity

-0.82

Correlation Coefficient

Confluent  Internet Infinity

Pay attention - limited upside

The 3 months correlation between Confluent and Internet is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Internet Infinity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Infinity and Confluent 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 Confluent are associated (or correlated) with Internet Infinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Infinity has no effect on the direction of Confluent i.e., Confluent and Internet Infinity go up and down completely randomly.

Pair Corralation between Confluent and Internet Infinity

Given the investment horizon of 90 days Confluent is expected to generate 1.72 times less return on investment than Internet Infinity. But when comparing it to its historical volatility, Confluent is 2.43 times less risky than Internet Infinity. It trades about 0.04 of its potential returns per unit of risk. Internet Infinity is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3.40  in Internet Infinity on October 11, 2024 and sell it today you would lose (2.34) from holding Internet Infinity or give up 68.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Confluent  vs.  Internet Infinity

Confluent

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Internet Infinity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Internet Infinity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Confluent and Internet Infinity

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

The idea behind Confluent and Internet Infinity 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..