Correlation Between International Consolidated and Batm Advanced

Can any of the company-specific risk be diversified away by investing in both International Consolidated and Batm Advanced 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 International Consolidated and Batm Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Consolidated Airlines and Batm Advanced Communications, you can compare the effects of market volatilities on International Consolidated and Batm Advanced 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 International Consolidated with a short position of Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Batm Advanced.

Diversification Opportunities for International Consolidated and Batm Advanced

-0.58

Correlation Coefficient

International Consolidated  Batm Advanced

Excellent diversification

The 3 months correlation between International and Batm is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of International Consolidated i.e., International Consolidated and Batm Advanced go up and down completely randomly.

Pair Corralation between International Consolidated and Batm Advanced

Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 0.49 times more return on investment than Batm Advanced. However, International Consolidated Airlines is 2.05 times less risky than Batm Advanced. It trades about 0.32 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.01 per unit of risk. If you would invest  19,555  in International Consolidated Airlines on September 12, 2024 and sell it today you would earn a total of  8,645  from holding International Consolidated Airlines or generate 44.21% return on investment over 90 days.

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

International Consolidated Air  vs.  Batm Advanced Communications

International Consolidated

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Batm Advanced Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Batm Advanced is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with International Consolidated and Batm Advanced

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

The idea behind International Consolidated Airlines and Batm Advanced Communications 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.