Correlation Between Intertech and N Leventeris

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

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

Diversification Opportunities for Intertech and N Leventeris

-0.57

Correlation Coefficient

Intertech  N Leventeris

Excellent diversification

The 3 months correlation between Intertech and LEBEP is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Intertech SA Inter and N Leventeris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Leventeris SA and Intertech 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 Intertech SA Inter are associated (or correlated) with N Leventeris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Leventeris SA has no effect on the direction of Intertech i.e., Intertech and N Leventeris go up and down completely randomly.

Pair Corralation between Intertech and N Leventeris

Assuming the 90 days trading horizon Intertech is expected to generate 2.91 times less return on investment than N Leventeris. But when comparing it to its historical volatility, Intertech SA Inter is 2.03 times less risky than N Leventeris. It trades about 0.02 of its potential returns per unit of risk. N Leventeris SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  22.00  in N Leventeris SA on October 10, 2024 and sell it today you would lose (1.00) from holding N Leventeris SA or give up 4.55% of portfolio value over 90 days.

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

Intertech SA Inter  vs.  N Leventeris SA

Intertech SA Inter

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intertech SA Inter are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Intertech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

N Leventeris SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in N Leventeris SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, N Leventeris may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Intertech and N Leventeris

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

The idea behind Intertech SA Inter and N Leventeris 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.