Correlation Between International Business and Intermedical Care

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

By analyzing existing cross correlation between International Business Machines and Intermedical Care and, you can compare the effects of market volatilities on International Business and Intermedical Care 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 Business with a short position of Intermedical Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Intermedical Care.

Diversification Opportunities for International Business and Intermedical Care

-0.14

Correlation Coefficient

International Business  Intermedical Care

Good diversification

The 3 months correlation between International and Intermedical is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Intermedical Care and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermedical Care and International Business 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 Business Machines are associated (or correlated) with Intermedical Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermedical Care has no effect on the direction of International Business i.e., International Business and Intermedical Care go up and down completely randomly.

Pair Corralation between International Business and Intermedical Care

Considering the 90-day investment horizon International Business is expected to generate 18.33 times less return on investment than Intermedical Care. But when comparing it to its historical volatility, International Business Machines is 40.87 times less risky than Intermedical Care. It trades about 0.1 of its potential returns per unit of risk. Intermedical Care and is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  940.00  in Intermedical Care and on October 4, 2024 and sell it today you would lose (464.00) from holding Intermedical Care and or give up 49.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.68%
Values	Daily Returns

International Business Machine  vs.  Intermedical Care and

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Intermedical Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermedical Care and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with International Business and Intermedical Care

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

The idea behind International Business Machines and Intermedical Care and 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.