Correlation Between Indra A and Squirrel Media

Can any of the company-specific risk be diversified away by investing in both Indra A and Squirrel Media 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 Indra A and Squirrel Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indra A and Squirrel Media SA, you can compare the effects of market volatilities on Indra A and Squirrel Media 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 Indra A with a short position of Squirrel Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indra A and Squirrel Media.

Diversification Opportunities for Indra A and Squirrel Media

0.92

Correlation Coefficient

Indra A  Squirrel Media

Almost no diversification

The 3 months correlation between Indra and Squirrel is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Indra A and Squirrel Media SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Squirrel Media SA and Indra A 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 Indra A are associated (or correlated) with Squirrel Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Squirrel Media SA has no effect on the direction of Indra A i.e., Indra A and Squirrel Media go up and down completely randomly.

Pair Corralation between Indra A and Squirrel Media

Assuming the 90 days trading horizon Indra A is expected to generate 1.9 times less return on investment than Squirrel Media. But when comparing it to its historical volatility, Indra A is 2.03 times less risky than Squirrel Media. It trades about 0.28 of its potential returns per unit of risk. Squirrel Media SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  123.00  in Squirrel Media SA on December 30, 2024 and sell it today you would earn a total of  153.00  from holding Squirrel Media SA or generate 124.39% return on investment over 90 days.

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

Indra A  vs.  Squirrel Media SA

Indra A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Indra A are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Indra A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Squirrel Media SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Squirrel Media SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Squirrel Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indra A and Squirrel Media

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

The idea behind Indra A and Squirrel Media SA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.