Correlation Between Converge Technology and Information Services

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

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

Diversification Opportunities for Converge Technology and Information Services

-0.31

Correlation Coefficient

Converge Technology  Information Services

Very good diversification

The 3 months correlation between Converge and Information is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Converge Technology Solutions and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services and Converge Technology 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 Converge Technology Solutions are associated (or correlated) with Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Converge Technology i.e., Converge Technology and Information Services go up and down completely randomly.

Pair Corralation between Converge Technology and Information Services

Assuming the 90 days trading horizon Converge Technology Solutions is expected to under-perform the Information Services. In addition to that, Converge Technology is 2.04 times more volatile than Information Services. It trades about 0.0 of its total potential returns per unit of risk. Information Services is currently generating about 0.04 per unit of volatility. If you would invest  1,990  in Information Services on October 26, 2024 and sell it today you would earn a total of  635.00  from holding Information Services or generate 31.91% return on investment over 90 days.

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

Converge Technology Solutions  vs.  Information Services

Converge Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Technology Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Converge Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Information Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Converge Technology and Information Services

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

The idea behind Converge Technology Solutions and Information Services 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.