Correlation Between Illinois Tool and Comba Telecom

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

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

Diversification Opportunities for Illinois Tool and Comba Telecom

-0.58

Correlation Coefficient

Illinois Tool  Comba Telecom

Excellent diversification

The 3 months correlation between Illinois and Comba is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Illinois Tool Works and Comba Telecom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comba Telecom Systems and Illinois Tool 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 Illinois Tool Works are associated (or correlated) with Comba Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comba Telecom Systems has no effect on the direction of Illinois Tool i.e., Illinois Tool and Comba Telecom go up and down completely randomly.

Pair Corralation between Illinois Tool and Comba Telecom

Assuming the 90 days horizon Illinois Tool is expected to generate 2.75 times less return on investment than Comba Telecom. But when comparing it to its historical volatility, Illinois Tool Works is 4.68 times less risky than Comba Telecom. It trades about 0.04 of its potential returns per unit of risk. Comba Telecom Systems is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Comba Telecom Systems on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Comba Telecom Systems or generate 0.0% return on investment over 90 days.

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

Illinois Tool Works  vs.  Comba Telecom Systems

Illinois Tool Works

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Illinois Tool Works are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Illinois Tool is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Comba Telecom Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Comba Telecom Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Comba Telecom may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Illinois Tool and Comba Telecom

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

The idea behind Illinois Tool Works and Comba Telecom Systems 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 Directory module to find actively traded commodities issued by global exchanges.