Correlation Between Intralot and Intracom Holdings

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

Diversification Opportunities for Intralot and Intracom Holdings

0.94

Correlation Coefficient

Intralot  Intracom Holdings

Almost no diversification

The 3 months correlation between Intralot and Intracom is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Intralot SA Integrated and Intracom Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intracom Holdings 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 Intracom Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intracom Holdings has no effect on the direction of Intralot i.e., Intralot and Intracom Holdings go up and down completely randomly.

Pair Corralation between Intralot and Intracom Holdings

Assuming the 90 days trading horizon Intralot SA Integrated is expected to under-perform the Intracom Holdings. In addition to that, Intralot is 1.04 times more volatile than Intracom Holdings SA. It trades about -0.2 of its total potential returns per unit of risk. Intracom Holdings SA is currently generating about -0.13 per unit of volatility. If you would invest  316.00  in Intracom Holdings SA on September 5, 2024 and sell it today you would lose (46.00) from holding Intracom Holdings SA or give up 14.56% of portfolio value over 90 days.

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

Intralot SA Integrated  vs.  Intracom Holdings SA

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Intracom Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intracom Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Intralot and Intracom Holdings

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

The idea behind Intralot SA Integrated and Intracom Holdings SA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.