Correlation Between Infomedia Press and Touchwood Entertainment

Can any of the company-specific risk be diversified away by investing in both Infomedia Press and Touchwood Entertainment 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 Touchwood Entertainment 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 Touchwood Entertainment Limited, you can compare the effects of market volatilities on Infomedia Press and Touchwood Entertainment 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 Touchwood Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infomedia Press and Touchwood Entertainment.

Diversification Opportunities for Infomedia Press and Touchwood Entertainment

0.74

Correlation Coefficient

Infomedia Press  Touchwood Entertainment

Poor diversification

The 3 months correlation between Infomedia and Touchwood is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia Press Limited and Touchwood Entertainment Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchwood Entertainment 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 Touchwood Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchwood Entertainment has no effect on the direction of Infomedia Press i.e., Infomedia Press and Touchwood Entertainment go up and down completely randomly.

Pair Corralation between Infomedia Press and Touchwood Entertainment

Assuming the 90 days trading horizon Infomedia Press is expected to generate 3.61 times less return on investment than Touchwood Entertainment. But when comparing it to its historical volatility, Infomedia Press Limited is 1.22 times less risky than Touchwood Entertainment. It trades about 0.04 of its potential returns per unit of risk. Touchwood Entertainment Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  14,185  in Touchwood Entertainment Limited on October 5, 2024 and sell it today you would earn a total of  1,129  from holding Touchwood Entertainment Limited or generate 7.96% return on investment over 90 days.

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

Infomedia Press Limited  vs.  Touchwood Entertainment Limite

Infomedia Press

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Touchwood Entertainment

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Touchwood Entertainment Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Touchwood Entertainment is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Infomedia Press and Touchwood Entertainment

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

The idea behind Infomedia Press Limited and Touchwood Entertainment Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.