Correlation Between Intal High and The Arbitrage

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

By analyzing existing cross correlation between Intal High Relative and The Arbitrage Fund, you can compare the effects of market volatilities on Intal High and The Arbitrage 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 Intal High with a short position of The Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intal High and The Arbitrage.

Diversification Opportunities for Intal High and The Arbitrage

0.78

Correlation Coefficient

Intal High  The Arbitrage

Poor diversification

The 3 months correlation between Intal and The is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Intal High Relative and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Arbitrage and Intal High 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 Intal High Relative are associated (or correlated) with The Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Arbitrage has no effect on the direction of Intal High i.e., Intal High and The Arbitrage go up and down completely randomly.

Pair Corralation between Intal High and The Arbitrage

Assuming the 90 days horizon Intal High Relative is expected to generate 4.13 times more return on investment than The Arbitrage. However, Intal High is 4.13 times more volatile than The Arbitrage Fund. It trades about 0.02 of its potential returns per unit of risk. The Arbitrage Fund is currently generating about 0.07 per unit of risk. If you would invest  1,300  in Intal High Relative on December 4, 2024 and sell it today you would earn a total of  40.00  from holding Intal High Relative or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.59%
Values	Daily Returns

Intal High Relative  vs.  The Arbitrage Fund

Intal High Relative

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intal High Relative are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Intal High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Arbitrage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Arbitrage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intal High and The Arbitrage

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

The idea behind Intal High Relative and The Arbitrage Fund 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..