Correlation Between International Consolidated and Alpha One

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

By analyzing existing cross correlation between International Consolidated Companies and Alpha One, you can compare the effects of market volatilities on International Consolidated and Alpha One 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 International Consolidated with a short position of Alpha One. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Alpha One.

Diversification Opportunities for International Consolidated and Alpha One

-0.27

Correlation Coefficient

International Consolidated  Alpha One

Very good diversification

The 3 months correlation between International and Alpha is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and Alpha One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha One and International Consolidated 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 International Consolidated Companies are associated (or correlated) with Alpha One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha One has no effect on the direction of International Consolidated i.e., International Consolidated and Alpha One go up and down completely randomly.

Pair Corralation between International Consolidated and Alpha One

Given the investment horizon of 90 days International Consolidated Companies is expected to generate 176.44 times more return on investment than Alpha One. However, International Consolidated is 176.44 times more volatile than Alpha One. It trades about 0.17 of its potential returns per unit of risk. Alpha One is currently generating about 0.13 per unit of risk. If you would invest  3.00  in International Consolidated Companies on December 22, 2024 and sell it today you would earn a total of  0.00  from holding International Consolidated Companies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

International Consolidated Com  vs.  Alpha One

International Consolidated

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alpha One

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha One are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alpha One is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with International Consolidated and Alpha One

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

The idea behind International Consolidated Companies and Alpha One 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.