Correlation Between Flint Telecom and Information Services

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

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

Diversification Opportunities for Flint Telecom and Information Services

-0.25

Correlation Coefficient

Flint Telecom  Information Services

Very good diversification

The 3 months correlation between Flint and Information is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Flint Telecom Group and Information Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services and Flint Telecom 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 Flint Telecom Group 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 Flint Telecom i.e., Flint Telecom and Information Services go up and down completely randomly.

Pair Corralation between Flint Telecom and Information Services

Given the investment horizon of 90 days Flint Telecom Group is expected to generate 5.55 times more return on investment than Information Services. However, Flint Telecom is 5.55 times more volatile than Information Services Group. It trades about 0.06 of its potential returns per unit of risk. Information Services Group is currently generating about 0.04 per unit of risk. If you would invest  130.00  in Flint Telecom Group on September 29, 2024 and sell it today you would earn a total of  11.00  from holding Flint Telecom Group or generate 8.46% return on investment over 90 days.

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

Flint Telecom Group  vs.  Information Services Group

Flint Telecom Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flint Telecom Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Flint Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

Information Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Information Services is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Flint Telecom and Information Services

The main advantage of trading using opposite Flint Telecom and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flint Telecom 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 Flint Telecom Group and Information Services Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.