Correlation Between Impact Coatings and Insplorion

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

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

Diversification Opportunities for Impact Coatings and Insplorion

0.43

Correlation Coefficient

Impact Coatings  Insplorion

Very weak diversification

The 3 months correlation between Impact and Insplorion is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Impact Coatings publ and Insplorion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insplorion AB and Impact Coatings 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 Impact Coatings publ are associated (or correlated) with Insplorion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insplorion AB has no effect on the direction of Impact Coatings i.e., Impact Coatings and Insplorion go up and down completely randomly.

Pair Corralation between Impact Coatings and Insplorion

Assuming the 90 days trading horizon Impact Coatings is expected to generate 9.52 times less return on investment than Insplorion. But when comparing it to its historical volatility, Impact Coatings publ is 2.08 times less risky than Insplorion. It trades about 0.01 of its potential returns per unit of risk. Insplorion AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Insplorion AB on December 1, 2024 and sell it today you would earn a total of  2.00  from holding Insplorion AB or generate 4.76% return on investment over 90 days.

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

Impact Coatings publ  vs.  Insplorion AB

Impact Coatings publ

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Impact Coatings publ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Impact Coatings is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Insplorion AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Insplorion AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Insplorion unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Impact Coatings and Insplorion

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

The idea behind Impact Coatings publ and Insplorion AB 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.