Correlation Between Infomedia and Suncorp

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

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

Diversification Opportunities for Infomedia and Suncorp

-0.59

Correlation Coefficient

Infomedia  Suncorp

Excellent diversification

The 3 months correlation between Infomedia and Suncorp is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia and Suncorp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group 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 Suncorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group has no effect on the direction of Infomedia i.e., Infomedia and Suncorp go up and down completely randomly.

Pair Corralation between Infomedia and Suncorp

Assuming the 90 days trading horizon Infomedia is expected to generate 2.97 times less return on investment than Suncorp. In addition to that, Infomedia is 2.06 times more volatile than Suncorp Group. It trades about 0.02 of its total potential returns per unit of risk. Suncorp Group is currently generating about 0.12 per unit of volatility. If you would invest  1,602  in Suncorp Group on October 4, 2024 and sell it today you would earn a total of  299.00  from holding Suncorp Group or generate 18.66% return on investment over 90 days.

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

Infomedia  vs.  Suncorp Group

Infomedia

Risk-Adjusted Performance

2 of 100

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 uncertain primary indicators, Infomedia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Suncorp Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suncorp Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Suncorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Infomedia and Suncorp

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

The idea behind Infomedia and Suncorp Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.