Correlation Between Infinity Capital and Mecanica

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

Diversification Opportunities for Infinity Capital and Mecanica

0.31

Correlation Coefficient

Infinity Capital  Mecanica

Weak diversification

The 3 months correlation between Infinity and Mecanica is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Infinity Capital Investments and Mecanica Sa Ce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mecanica Sa Ce 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 Mecanica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mecanica Sa Ce has no effect on the direction of Infinity Capital i.e., Infinity Capital and Mecanica go up and down completely randomly.

Pair Corralation between Infinity Capital and Mecanica

Assuming the 90 days trading horizon Infinity Capital Investments is expected to generate 0.24 times more return on investment than Mecanica. However, Infinity Capital Investments is 4.12 times less risky than Mecanica. It trades about 0.06 of its potential returns per unit of risk. Mecanica Sa Ce is currently generating about 0.02 per unit of risk. If you would invest  175.00  in Infinity Capital Investments on October 9, 2024 and sell it today you would earn a total of  68.00  from holding Infinity Capital Investments or generate 38.86% return on investment over 90 days.

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

Infinity Capital Investments  vs.  Mecanica Sa Ce

Infinity Capital Inv

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Infinity Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Mecanica Sa Ce

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Mecanica Sa Ce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Mecanica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Infinity Capital and Mecanica

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

The idea behind Infinity Capital Investments and Mecanica Sa Ce 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.