Correlation Between INTERNATIONAL ENERGY and INDUSTRIAL MEDICAL

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

By analyzing existing cross correlation between INTERNATIONAL ENERGY INSURANCE and INDUSTRIAL MEDICAL GASES, you can compare the effects of market volatilities on INTERNATIONAL ENERGY and INDUSTRIAL MEDICAL 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 INTERNATIONAL ENERGY with a short position of INDUSTRIAL MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNATIONAL ENERGY and INDUSTRIAL MEDICAL.

Diversification Opportunities for INTERNATIONAL ENERGY and INDUSTRIAL MEDICAL

0.24

Correlation Coefficient

INTERNATIONAL ENERGY  INDUSTRIAL MEDICAL

Modest diversification

The 3 months correlation between INTERNATIONAL and INDUSTRIAL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL ENERGY INSURANCE and INDUSTRIAL MEDICAL GASES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDUSTRIAL MEDICAL GASES and INTERNATIONAL ENERGY 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 INTERNATIONAL ENERGY INSURANCE are associated (or correlated) with INDUSTRIAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDUSTRIAL MEDICAL GASES has no effect on the direction of INTERNATIONAL ENERGY i.e., INTERNATIONAL ENERGY and INDUSTRIAL MEDICAL go up and down completely randomly.

Pair Corralation between INTERNATIONAL ENERGY and INDUSTRIAL MEDICAL

Assuming the 90 days trading horizon INTERNATIONAL ENERGY INSURANCE is expected to generate 329.98 times more return on investment than INDUSTRIAL MEDICAL. However, INTERNATIONAL ENERGY is 329.98 times more volatile than INDUSTRIAL MEDICAL GASES. It trades about 0.01 of its potential returns per unit of risk. INDUSTRIAL MEDICAL GASES is currently generating about 0.12 per unit of risk. If you would invest  170.00  in INTERNATIONAL ENERGY INSURANCE on December 30, 2024 and sell it today you would lose (8.00) from holding INTERNATIONAL ENERGY INSURANCE or give up 4.71% of portfolio value over 90 days.

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

INTERNATIONAL ENERGY INSURANCE  vs.  INDUSTRIAL MEDICAL GASES

INTERNATIONAL ENERGY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERNATIONAL ENERGY INSURANCE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTERNATIONAL ENERGY is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

INDUSTRIAL MEDICAL GASES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDUSTRIAL MEDICAL GASES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, INDUSTRIAL MEDICAL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with INTERNATIONAL ENERGY and INDUSTRIAL MEDICAL

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

The idea behind INTERNATIONAL ENERGY INSURANCE and INDUSTRIAL MEDICAL GASES 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.