Correlation Between Intralot and Foodlink

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

By analyzing existing cross correlation between Intralot SA Integrated and Foodlink AE, you can compare the effects of market volatilities on Intralot and Foodlink 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 Intralot with a short position of Foodlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intralot and Foodlink.

Diversification Opportunities for Intralot and Foodlink

-0.27

Correlation Coefficient

Intralot  Foodlink

Very good diversification

The 3 months correlation between Intralot and Foodlink is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Intralot SA Integrated and Foodlink AE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodlink AE and Intralot 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 Intralot SA Integrated are associated (or correlated) with Foodlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodlink AE has no effect on the direction of Intralot i.e., Intralot and Foodlink go up and down completely randomly.

Pair Corralation between Intralot and Foodlink

Assuming the 90 days trading horizon Intralot is expected to generate 7.72 times less return on investment than Foodlink. But when comparing it to its historical volatility, Intralot SA Integrated is 1.69 times less risky than Foodlink. It trades about 0.0 of its potential returns per unit of risk. Foodlink AE is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Foodlink AE on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Foodlink AE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.77%
Values	Daily Returns

Intralot SA Integrated  vs.  Foodlink AE

Intralot SA Integrated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intralot SA Integrated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Foodlink AE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Foodlink AE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Foodlink sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intralot and Foodlink

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

The idea behind Intralot SA Integrated and Foodlink AE 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..