Correlation Between Interlife General and Logismos Information

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Can any of the company-specific risk be diversified away by investing in both Interlife General and Logismos Information 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 Interlife General and Logismos Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interlife General Insurance and Logismos Information Systems, you can compare the effects of market volatilities on Interlife General and Logismos Information 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 Interlife General with a short position of Logismos Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interlife General and Logismos Information.

Diversification Opportunities for Interlife General and Logismos Information

0.74
  Correlation Coefficient

Poor diversification

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

Pair Corralation between Interlife General and Logismos Information

Assuming the 90 days trading horizon Interlife General Insurance is expected to generate 2.47 times more return on investment than Logismos Information. However, Interlife General is 2.47 times more volatile than Logismos Information Systems. It trades about 0.24 of its potential returns per unit of risk. Logismos Information Systems is currently generating about -0.29 per unit of risk. If you would invest  454.00  in Interlife General Insurance on December 3, 2024 and sell it today you would earn a total of  37.00  from holding Interlife General Insurance or generate 8.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Interlife General Insurance  vs.  Logismos Information Systems

 Performance 
       Timeline  
Interlife General 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Interlife General Insurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Interlife General sustained solid returns over the last few months and may actually be approaching a breakup point.
Logismos Information 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Logismos Information Systems are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Logismos Information displayed solid returns over the last few months and may actually be approaching a breakup point.

Interlife General and Logismos Information Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Interlife General and Logismos Information

The main advantage of trading using opposite Interlife General and Logismos Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interlife General position performs unexpectedly, Logismos Information 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 Logismos Information will offset losses from the drop in Logismos Information's long position.
The idea behind Interlife General Insurance and Logismos Information Systems 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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