Correlation Between Induction Healthcare and Auction Technology

Can any of the company-specific risk be diversified away by investing in both Induction Healthcare and Auction Technology 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 Induction Healthcare and Auction Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Induction Healthcare Group and Auction Technology Group, you can compare the effects of market volatilities on Induction Healthcare and Auction Technology 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 Induction Healthcare with a short position of Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Auction Technology.

Diversification Opportunities for Induction Healthcare and Auction Technology

0.37

Correlation Coefficient

Induction Healthcare  Auction Technology

Weak diversification

The 3 months correlation between Induction and Auction is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology and Induction Healthcare 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 Induction Healthcare Group are associated (or correlated) with Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and Auction Technology go up and down completely randomly.

Pair Corralation between Induction Healthcare and Auction Technology

Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the Auction Technology. In addition to that, Induction Healthcare is 1.39 times more volatile than Auction Technology Group. It trades about -0.03 of its total potential returns per unit of risk. Auction Technology Group is currently generating about 0.0 per unit of volatility. If you would invest  69,200  in Auction Technology Group on October 23, 2024 and sell it today you would lose (11,200) from holding Auction Technology Group or give up 16.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Induction Healthcare Group  vs.  Auction Technology Group

Induction Healthcare

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Induction Healthcare Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Induction Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Auction Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Auction Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Induction Healthcare and Auction Technology

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

The idea behind Induction Healthcare Group and Auction Technology Group 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.