Correlation Between Intertech and EL D

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

Diversification Opportunities for Intertech and EL D

0.46

Correlation Coefficient

Intertech  EL D

Very weak diversification

The 3 months correlation between Intertech and MOYZK is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intertech SA Inter and EL D Mouzakis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EL D Mouzakis 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 EL D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EL D Mouzakis has no effect on the direction of Intertech i.e., Intertech and EL D go up and down completely randomly.

Pair Corralation between Intertech and EL D

Assuming the 90 days trading horizon Intertech SA Inter is expected to generate 0.92 times more return on investment than EL D. However, Intertech SA Inter is 1.09 times less risky than EL D. It trades about 0.16 of its potential returns per unit of risk. EL D Mouzakis is currently generating about 0.01 per unit of risk. If you would invest  104.00  in Intertech SA Inter on December 4, 2024 and sell it today you would earn a total of  21.00  from holding Intertech SA Inter or generate 20.19% return on investment over 90 days.

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

Intertech SA Inter  vs.  EL D Mouzakis

Intertech SA Inter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intertech SA Inter are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intertech sustained solid returns over the last few months and may actually be approaching a breakup point.

EL D Mouzakis

Risk-Adjusted Performance

Very Weak

Over the last 90 days EL D Mouzakis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EL D is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intertech and EL D

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

The idea behind Intertech SA Inter and EL D Mouzakis 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.