Correlation Between Identiv and Indutrade

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

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

Diversification Opportunities for Identiv and Indutrade

-0.79

Correlation Coefficient

Identiv  Indutrade

Pay attention - limited upside

The 3 months correlation between Identiv and Indutrade is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Identiv 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 Identiv are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Identiv i.e., Identiv and Indutrade go up and down completely randomly.

Pair Corralation between Identiv and Indutrade

Assuming the 90 days trading horizon Identiv is expected to generate 1.97 times more return on investment than Indutrade. However, Identiv is 1.97 times more volatile than Indutrade AB. It trades about 0.14 of its potential returns per unit of risk. Indutrade AB is currently generating about -0.13 per unit of risk. If you would invest  285.00  in Identiv on September 4, 2024 and sell it today you would earn a total of  75.00  from holding Identiv or generate 26.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Identiv  vs.  Indutrade AB

Identiv

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Identiv and Indutrade

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

The idea behind Identiv and Indutrade AB 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 Transaction History module to view history of all your transactions and understand their impact on performance.