Correlation Between IHS Holding and IDT

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

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

Diversification Opportunities for IHS Holding and IDT

-0.55

Correlation Coefficient

IHS Holding  IDT

Excellent diversification

The 3 months correlation between IHS and IDT is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding IHS Holding and IDT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDT Corporation and IHS Holding 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 IHS Holding are associated (or correlated) with IDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDT Corporation has no effect on the direction of IHS Holding i.e., IHS Holding and IDT go up and down completely randomly.

Pair Corralation between IHS Holding and IDT

Considering the 90-day investment horizon IHS Holding is expected to generate 5.83 times less return on investment than IDT. But when comparing it to its historical volatility, IHS Holding is 1.22 times less risky than IDT. It trades about 0.03 of its potential returns per unit of risk. IDT Corporation is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,875  in IDT Corporation on September 2, 2024 and sell it today you would earn a total of  1,289  from holding IDT Corporation or generate 33.26% return on investment over 90 days.

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

IHS Holding  vs.  IDT Corp.

IHS Holding

Risk-Adjusted Performance

2 of 100

Weak

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

IDT Corporation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDT Corporation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, IDT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IHS Holding and IDT

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

The idea behind IHS Holding and IDT Corporation 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..