Correlation Between Infomedia and Orora

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

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

Diversification Opportunities for Infomedia and Orora

-0.25

Correlation Coefficient

Infomedia  Orora

Very good diversification

The 3 months correlation between Infomedia and Orora is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia and Orora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orora and Infomedia 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 Infomedia are associated (or correlated) with Orora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orora has no effect on the direction of Infomedia i.e., Infomedia and Orora go up and down completely randomly.

Pair Corralation between Infomedia and Orora

Assuming the 90 days trading horizon Infomedia is expected to generate 1.49 times more return on investment than Orora. However, Infomedia is 1.49 times more volatile than Orora. It trades about 0.04 of its potential returns per unit of risk. Orora is currently generating about -0.1 per unit of risk. If you would invest  131.00  in Infomedia on December 1, 2024 and sell it today you would earn a total of  5.00  from holding Infomedia or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Infomedia  vs.  Orora

Infomedia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infomedia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Infomedia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Orora

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Infomedia and Orora

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

The idea behind Infomedia and Orora 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.