Correlation Between Infomedia Press and Rainbow Childrens

Can any of the company-specific risk be diversified away by investing in both Infomedia Press and Rainbow Childrens 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 Infomedia Press and Rainbow Childrens into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Infomedia Press Limited and Rainbow Childrens Medicare, you can compare the effects of market volatilities on Infomedia Press and Rainbow Childrens 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 Infomedia Press with a short position of Rainbow Childrens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infomedia Press and Rainbow Childrens.

Diversification Opportunities for Infomedia Press and Rainbow Childrens

0.69

Correlation Coefficient

Infomedia Press  Rainbow Childrens

Poor diversification

The 3 months correlation between Infomedia and Rainbow is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia Press Limited and Rainbow Childrens Medicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainbow Childrens and Infomedia Press 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 Infomedia Press Limited are associated (or correlated) with Rainbow Childrens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainbow Childrens has no effect on the direction of Infomedia Press i.e., Infomedia Press and Rainbow Childrens go up and down completely randomly.

Pair Corralation between Infomedia Press and Rainbow Childrens

Assuming the 90 days trading horizon Infomedia Press Limited is expected to under-perform the Rainbow Childrens. In addition to that, Infomedia Press is 1.41 times more volatile than Rainbow Childrens Medicare. It trades about -0.11 of its total potential returns per unit of risk. Rainbow Childrens Medicare is currently generating about -0.03 per unit of volatility. If you would invest  148,855  in Rainbow Childrens Medicare on December 29, 2024 and sell it today you would lose (8,685) from holding Rainbow Childrens Medicare or give up 5.83% of portfolio value over 90 days.

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

Infomedia Press Limited  vs.  Rainbow Childrens Medicare

Infomedia Press

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infomedia Press Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Rainbow Childrens

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rainbow Childrens Medicare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, Rainbow Childrens is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Infomedia Press and Rainbow Childrens

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

The idea behind Infomedia Press Limited and Rainbow Childrens Medicare 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.