Correlation Between Electricity Generating and Intouch Holdings

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

By analyzing existing cross correlation between Electricity Generating Public and Intouch Holdings Public, you can compare the effects of market volatilities on Electricity Generating and Intouch Holdings 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 Electricity Generating with a short position of Intouch Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electricity Generating and Intouch Holdings.

Diversification Opportunities for Electricity Generating and Intouch Holdings

0.01

Correlation Coefficient

Electricity Generating  Intouch Holdings

Significant diversification

The 3 months correlation between Electricity and Intouch is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Electricity Generating Public and Intouch Holdings Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intouch Holdings Public and Electricity Generating 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 Electricity Generating Public are associated (or correlated) with Intouch Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intouch Holdings Public has no effect on the direction of Electricity Generating i.e., Electricity Generating and Intouch Holdings go up and down completely randomly.

Pair Corralation between Electricity Generating and Intouch Holdings

Assuming the 90 days trading horizon Electricity Generating Public is expected to under-perform the Intouch Holdings. In addition to that, Electricity Generating is 1.04 times more volatile than Intouch Holdings Public. It trades about -0.03 of its total potential returns per unit of risk. Intouch Holdings Public is currently generating about 0.06 per unit of volatility. If you would invest  6,795  in Intouch Holdings Public on September 25, 2024 and sell it today you would earn a total of  2,855  from holding Intouch Holdings Public or generate 42.02% return on investment over 90 days.

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

Electricity Generating Public  vs.  Intouch Holdings Public

Electricity Generating

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electricity Generating Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Electricity Generating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Intouch Holdings Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intouch Holdings Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Intouch Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Electricity Generating and Intouch Holdings

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

The idea behind Electricity Generating Public and Intouch Holdings Public 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.