Correlation Between INPX Old and Dear Cashmere

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

By analyzing existing cross correlation between INPX Old and Dear Cashmere Holding, you can compare the effects of market volatilities on INPX Old and Dear Cashmere 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 INPX Old with a short position of Dear Cashmere. Check out your portfolio center. Please also check ongoing floating volatility patterns of INPX Old and Dear Cashmere.

Diversification Opportunities for INPX Old and Dear Cashmere

-0.31

Correlation Coefficient

INPX Old  Dear Cashmere

Very good diversification

The 3 months correlation between INPX and Dear is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding INPX Old and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding and INPX Old 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 INPX Old are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of INPX Old i.e., INPX Old and Dear Cashmere go up and down completely randomly.

Pair Corralation between INPX Old and Dear Cashmere

Given the investment horizon of 90 days INPX Old is expected to under-perform the Dear Cashmere. But the stock apears to be less risky and, when comparing its historical volatility, INPX Old is 3.17 times less risky than Dear Cashmere. The stock trades about -0.07 of its potential returns per unit of risk. The Dear Cashmere Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Dear Cashmere Holding on October 11, 2024 and sell it today you would lose (25.31) from holding Dear Cashmere Holding or give up 74.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.86%
Values	Daily Returns

INPX Old  vs.  Dear Cashmere Holding

INPX Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INPX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, INPX Old is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Dear Cashmere Holding

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dear Cashmere Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with INPX Old and Dear Cashmere

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

The idea behind INPX Old and Dear Cashmere Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.