Correlation Between Chilwa Minerals and Infomedia

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

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

Diversification Opportunities for Chilwa Minerals and Infomedia

0.28

Correlation Coefficient

Chilwa Minerals  Infomedia

Modest diversification

The 3 months correlation between Chilwa and Infomedia is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Chilwa Minerals Limited and Infomedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia and Chilwa Minerals 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 Chilwa Minerals Limited are associated (or correlated) with Infomedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia has no effect on the direction of Chilwa Minerals i.e., Chilwa Minerals and Infomedia go up and down completely randomly.

Pair Corralation between Chilwa Minerals and Infomedia

Assuming the 90 days trading horizon Chilwa Minerals Limited is expected to under-perform the Infomedia. In addition to that, Chilwa Minerals is 1.05 times more volatile than Infomedia. It trades about -0.08 of its total potential returns per unit of risk. Infomedia is currently generating about 0.06 per unit of volatility. If you would invest  136.00  in Infomedia on October 6, 2024 and sell it today you would earn a total of  8.00  from holding Infomedia or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Chilwa Minerals Limited  vs.  Infomedia

Chilwa Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chilwa Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Infomedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Infomedia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chilwa Minerals and Infomedia

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

The idea behind Chilwa Minerals Limited and Infomedia 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.