Correlation Between International Consolidated and SST WT

Can any of the company-specific risk be diversified away by investing in both International Consolidated and SST WT 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 SST WT 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 SST WT, you can compare the effects of market volatilities on International Consolidated and SST WT 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 SST WT. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and SST WT.

Diversification Opportunities for International Consolidated and SST WT

0.04

Correlation Coefficient

International Consolidated  SST WT

Significant diversification

The 3 months correlation between International and SST is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and SST WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SST WT 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 SST WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SST WT has no effect on the direction of International Consolidated i.e., International Consolidated and SST WT go up and down completely randomly.

Pair Corralation between International Consolidated and SST WT

Given the investment horizon of 90 days International Consolidated Companies is expected to generate 9.7 times more return on investment than SST WT. However, International Consolidated is 9.7 times more volatile than SST WT. It trades about 0.19 of its potential returns per unit of risk. SST WT is currently generating about 0.02 per unit of risk. If you would invest  0.00  in International Consolidated Companies on October 9, 2024 and sell it today you would earn a total of  2.50  from holding International Consolidated Companies or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	26.23%
Values	Daily Returns

International Consolidated Com  vs.  SST WT

International Consolidated

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 15 (%) 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.

SST WT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SST WT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SST WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Consolidated and SST WT

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

The idea behind International Consolidated Companies and SST WT 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.