Correlation Between Information Services and GuocoLand

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

By analyzing existing cross correlation between Information Services International Dentsu and GuocoLand Limited, you can compare the effects of market volatilities on Information Services and GuocoLand 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 Information Services with a short position of GuocoLand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and GuocoLand.

Diversification Opportunities for Information Services and GuocoLand

-0.74

Correlation Coefficient

Information Services  GuocoLand

Pay attention - limited upside

The 3 months correlation between Information and GuocoLand is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and GuocoLand Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuocoLand Limited and Information Services 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 Information Services International Dentsu are associated (or correlated) with GuocoLand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuocoLand Limited has no effect on the direction of Information Services i.e., Information Services and GuocoLand go up and down completely randomly.

Pair Corralation between Information Services and GuocoLand

Assuming the 90 days horizon Information Services International Dentsu is expected to under-perform the GuocoLand. In addition to that, Information Services is 3.03 times more volatile than GuocoLand Limited. It trades about -0.03 of its total potential returns per unit of risk. GuocoLand Limited is currently generating about 0.2 per unit of volatility. If you would invest  97.00  in GuocoLand Limited on September 4, 2024 and sell it today you would earn a total of  9.00  from holding GuocoLand Limited or generate 9.28% return on investment over 90 days.

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

Information Services Internati  vs.  GuocoLand Limited

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

GuocoLand Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GuocoLand may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Information Services and GuocoLand

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

The idea behind Information Services International Dentsu and GuocoLand 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.