Correlation Between Intouch Insight and DubberLimited

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

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

Diversification Opportunities for Intouch Insight and DubberLimited

-0.23

Correlation Coefficient

Intouch Insight  DubberLimited

Very good diversification

The 3 months correlation between Intouch and DubberLimited is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Insight and Dubber Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dubber Limited and Intouch Insight 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 Insight are associated (or correlated) with DubberLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dubber Limited has no effect on the direction of Intouch Insight i.e., Intouch Insight and DubberLimited go up and down completely randomly.

Pair Corralation between Intouch Insight and DubberLimited

Assuming the 90 days horizon Intouch Insight is expected to generate 15.22 times less return on investment than DubberLimited. But when comparing it to its historical volatility, Intouch Insight is 10.42 times less risky than DubberLimited. It trades about 0.03 of its potential returns per unit of risk. Dubber Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Dubber Limited on December 1, 2024 and sell it today you would lose (18.93) from holding Dubber Limited or give up 99.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.91%
Values	Daily Returns

Intouch Insight  vs.  Dubber Limited

Intouch Insight

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intouch Insight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intouch Insight is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dubber Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dubber Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DubberLimited reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intouch Insight and DubberLimited

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

The idea behind Intouch Insight and Dubber Limited 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.