Correlation Between I Tech and Starbreeze

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

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

Diversification Opportunities for I Tech and Starbreeze

-0.39

Correlation Coefficient

I Tech  Starbreeze

Very good diversification

The 3 months correlation between ITECH and Starbreeze is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding I Tech and Starbreeze AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbreeze AB and I Tech 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 Tech are associated (or correlated) with Starbreeze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbreeze AB has no effect on the direction of I Tech i.e., I Tech and Starbreeze go up and down completely randomly.

Pair Corralation between I Tech and Starbreeze

Assuming the 90 days trading horizon I Tech is expected to generate 0.4 times more return on investment than Starbreeze. However, I Tech is 2.5 times less risky than Starbreeze. It trades about 0.02 of its potential returns per unit of risk. Starbreeze AB is currently generating about -0.02 per unit of risk. If you would invest  5,434  in I Tech on September 24, 2024 and sell it today you would earn a total of  366.00  from holding I Tech or generate 6.74% return on investment over 90 days.

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

I Tech  vs.  Starbreeze AB

I Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, I Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Starbreeze AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starbreeze AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with I Tech and Starbreeze

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

The idea behind I Tech and Starbreeze 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.