Correlation Between Intal High and Intermediate Government

Can any of the company-specific risk be diversified away by investing in both Intal High and Intermediate Government 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 Intermediate Government 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 Intermediate Government Bond, you can compare the effects of market volatilities on Intal High and Intermediate Government 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 Intermediate Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intal High and Intermediate Government.

Diversification Opportunities for Intal High and Intermediate Government

0.47

Correlation Coefficient

Intal High  Intermediate Government

Very weak diversification

The 3 months correlation between Intal and Intermediate is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intal High Relative and Intermediate Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Government 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 Intermediate Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Government has no effect on the direction of Intal High i.e., Intal High and Intermediate Government go up and down completely randomly.

Pair Corralation between Intal High and Intermediate Government

Assuming the 90 days horizon Intal High is expected to generate 1.59 times less return on investment than Intermediate Government. In addition to that, Intal High is 8.05 times more volatile than Intermediate Government Bond. It trades about 0.01 of its total potential returns per unit of risk. Intermediate Government Bond is currently generating about 0.13 per unit of volatility. If you would invest  915.00  in Intermediate Government Bond on October 6, 2024 and sell it today you would earn a total of  31.00  from holding Intermediate Government Bond or generate 3.39% return on investment over 90 days.

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

Intal High Relative  vs.  Intermediate Government Bond

Intal High Relative

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intal High Relative has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Intermediate Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Government Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Intermediate Government 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 Intermediate Government

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

The idea behind Intal High Relative and Intermediate Government Bond 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .