Correlation Between Infinity Capital and IAR SA

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

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

Diversification Opportunities for Infinity Capital and IAR SA

-0.65

Correlation Coefficient

Infinity Capital  IAR SA

Excellent diversification

The 3 months correlation between Infinity and IAR is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Infinity Capital Investments and IAR SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR SA and Infinity Capital 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 Infinity Capital Investments are associated (or correlated) with IAR SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR SA has no effect on the direction of Infinity Capital i.e., Infinity Capital and IAR SA go up and down completely randomly.

Pair Corralation between Infinity Capital and IAR SA

Assuming the 90 days trading horizon Infinity Capital is expected to generate 4.43 times less return on investment than IAR SA. But when comparing it to its historical volatility, Infinity Capital Investments is 2.69 times less risky than IAR SA. It trades about 0.02 of its potential returns per unit of risk. IAR SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,255  in IAR SA on December 25, 2024 and sell it today you would earn a total of  40.00  from holding IAR SA or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Infinity Capital Investments  vs.  IAR SA

Infinity Capital Inv

Risk-Adjusted Performance

Weak

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

IAR SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IAR SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IAR SA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Infinity Capital and IAR SA

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

The idea behind Infinity Capital Investments and IAR SA 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..