Correlation Between Indo Amines and Country Club

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

By analyzing existing cross correlation between Indo Amines Limited and Country Club Hospitality, you can compare the effects of market volatilities on Indo Amines and Country Club 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 Indo Amines with a short position of Country Club. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Amines and Country Club.

Diversification Opportunities for Indo Amines and Country Club

0.34

Correlation Coefficient

Indo Amines  Country Club

Weak diversification

The 3 months correlation between Indo and Country is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Indo Amines Limited and Country Club Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Club Hospitality and Indo Amines 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 Indo Amines Limited are associated (or correlated) with Country Club. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Club Hospitality has no effect on the direction of Indo Amines i.e., Indo Amines and Country Club go up and down completely randomly.

Pair Corralation between Indo Amines and Country Club

Assuming the 90 days trading horizon Indo Amines Limited is expected to generate 1.24 times more return on investment than Country Club. However, Indo Amines is 1.24 times more volatile than Country Club Hospitality. It trades about 0.0 of its potential returns per unit of risk. Country Club Hospitality is currently generating about -0.02 per unit of risk. If you would invest  18,344  in Indo Amines Limited on August 31, 2024 and sell it today you would lose (770.00) from holding Indo Amines Limited or give up 4.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Indo Amines Limited  vs.  Country Club Hospitality

Indo Amines Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Amines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Indo Amines is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Country Club Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Country Club is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Indo Amines and Country Club

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

The idea behind Indo Amines Limited and Country Club Hospitality 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.