Correlation Between Intouch Holdings and Megachem Public

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

By analyzing existing cross correlation between Intouch Holdings Public and Megachem Public, you can compare the effects of market volatilities on Intouch Holdings and Megachem Public 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 Intouch Holdings with a short position of Megachem Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intouch Holdings and Megachem Public.

Diversification Opportunities for Intouch Holdings and Megachem Public

-0.47

Correlation Coefficient

Intouch Holdings  Megachem Public

Very good diversification

The 3 months correlation between Intouch and Megachem is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Holdings Public and Megachem Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megachem Public and Intouch Holdings 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 Intouch Holdings Public are associated (or correlated) with Megachem Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megachem Public has no effect on the direction of Intouch Holdings i.e., Intouch Holdings and Megachem Public go up and down completely randomly.

Pair Corralation between Intouch Holdings and Megachem Public

Assuming the 90 days trading horizon Intouch Holdings Public is expected to generate 1.16 times more return on investment than Megachem Public. However, Intouch Holdings is 1.16 times more volatile than Megachem Public. It trades about 0.1 of its potential returns per unit of risk. Megachem Public is currently generating about -0.16 per unit of risk. If you would invest  8,975  in Intouch Holdings Public on September 13, 2024 and sell it today you would earn a total of  1,175  from holding Intouch Holdings Public or generate 13.09% return on investment over 90 days.

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

Intouch Holdings Public  vs.  Megachem Public

Intouch Holdings Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intouch Holdings Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intouch Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Megachem Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Megachem Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Intouch Holdings and Megachem Public

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

The idea behind Intouch Holdings Public and Megachem Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.