Correlation Between Interlink Communication and Samart Telcoms

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

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

Diversification Opportunities for Interlink Communication and Samart Telcoms

-0.63

Correlation Coefficient

Interlink Communication  Samart Telcoms

Excellent diversification

The 3 months correlation between Interlink and Samart is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Interlink Communication Public and Samart Telcoms Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Telcoms Public and Interlink Communication 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 Interlink Communication Public are associated (or correlated) with Samart Telcoms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Telcoms Public has no effect on the direction of Interlink Communication i.e., Interlink Communication and Samart Telcoms go up and down completely randomly.

Pair Corralation between Interlink Communication and Samart Telcoms

Assuming the 90 days trading horizon Interlink Communication Public is expected to under-perform the Samart Telcoms. But the stock apears to be less risky and, when comparing its historical volatility, Interlink Communication Public is 42.68 times less risky than Samart Telcoms. The stock trades about -0.03 of its potential returns per unit of risk. The Samart Telcoms Public is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  316.00  in Samart Telcoms Public on September 14, 2024 and sell it today you would earn a total of  339.00  from holding Samart Telcoms Public or generate 107.28% return on investment over 90 days.

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

Interlink Communication Public  vs.  Samart Telcoms Public

Interlink Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interlink Communication Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Interlink Communication is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Samart Telcoms Public

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Telcoms Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Samart Telcoms sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interlink Communication and Samart Telcoms

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

The idea behind Interlink Communication Public and Samart Telcoms Public 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..