Correlation Between I Tail and North East

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

By analyzing existing cross correlation between i Tail Corp PCL and North East Rubbers, you can compare the effects of market volatilities on I Tail and North East 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 I Tail with a short position of North East. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Tail and North East.

Diversification Opportunities for I Tail and North East

0.02

Correlation Coefficient

I Tail  North East

Significant diversification

The 3 months correlation between ITC and North is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding i Tail Corp PCL and North East Rubbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North East Rubbers and I Tail 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 i Tail Corp PCL are associated (or correlated) with North East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North East Rubbers has no effect on the direction of I Tail i.e., I Tail and North East go up and down completely randomly.

Pair Corralation between I Tail and North East

Assuming the 90 days trading horizon i Tail Corp PCL is expected to under-perform the North East. In addition to that, I Tail is 1.51 times more volatile than North East Rubbers. It trades about -0.01 of its total potential returns per unit of risk. North East Rubbers is currently generating about 0.0 per unit of volatility. If you would invest  524.00  in North East Rubbers on September 12, 2024 and sell it today you would lose (42.00) from holding North East Rubbers or give up 8.02% of portfolio value over 90 days.

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

i Tail Corp PCL  vs.  North East Rubbers

i Tail Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in i Tail Corp PCL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, I Tail disclosed solid returns over the last few months and may actually be approaching a breakup point.

North East Rubbers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North East Rubbers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, North East is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with I Tail and North East

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

The idea behind i Tail Corp PCL and North East Rubbers 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.