Correlation Between Intertech and Thrace Plastics

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

Diversification Opportunities for Intertech and Thrace Plastics

0.17

Correlation Coefficient

Intertech  Thrace Plastics

Average diversification

The 3 months correlation between Intertech and Thrace is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Intertech SA Inter and Thrace Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrace Plastics Holding 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 Thrace Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrace Plastics Holding has no effect on the direction of Intertech i.e., Intertech and Thrace Plastics go up and down completely randomly.

Pair Corralation between Intertech and Thrace Plastics

Assuming the 90 days trading horizon Intertech SA Inter is expected to generate 1.64 times more return on investment than Thrace Plastics. However, Intertech is 1.64 times more volatile than Thrace Plastics Holding. It trades about 0.07 of its potential returns per unit of risk. Thrace Plastics Holding is currently generating about 0.06 per unit of risk. If you would invest  105.00  in Intertech SA Inter on December 29, 2024 and sell it today you would earn a total of  9.00  from holding Intertech SA Inter or generate 8.57% return on investment over 90 days.

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

Intertech SA Inter  vs.  Thrace Plastics Holding

Intertech SA Inter

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intertech SA Inter are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intertech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Thrace Plastics Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thrace Plastics Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Thrace Plastics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Intertech and Thrace Plastics

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

The idea behind Intertech SA Inter and Thrace Plastics 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.