Correlation Between Infotel SA and Artois Nom

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

By analyzing existing cross correlation between Infotel SA and Artois Nom, you can compare the effects of market volatilities on Infotel SA and Artois Nom 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 Infotel SA with a short position of Artois Nom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infotel SA and Artois Nom.

Diversification Opportunities for Infotel SA and Artois Nom

0.83

Correlation Coefficient

Infotel SA  Artois Nom

Very poor diversification

The 3 months correlation between Infotel and Artois is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Infotel SA and Artois Nom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artois Nom and Infotel SA 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 Infotel SA are associated (or correlated) with Artois Nom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artois Nom has no effect on the direction of Infotel SA i.e., Infotel SA and Artois Nom go up and down completely randomly.

Pair Corralation between Infotel SA and Artois Nom

Assuming the 90 days trading horizon Infotel SA is expected to generate 11.14 times less return on investment than Artois Nom. But when comparing it to its historical volatility, Infotel SA is 6.03 times less risky than Artois Nom. It trades about 0.07 of its potential returns per unit of risk. Artois Nom is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  550,000  in Artois Nom on August 30, 2024 and sell it today you would earn a total of  405,000  from holding Artois Nom or generate 73.64% return on investment over 90 days.

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

Infotel SA  vs.  Artois Nom

Infotel SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Infotel SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Infotel SA may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Artois Nom

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artois Nom are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Artois Nom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infotel SA and Artois Nom

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

The idea behind Infotel SA and Artois Nom 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.