Correlation Between I Tech and Storytel

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

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

Diversification Opportunities for I Tech and Storytel

0.24

Correlation Coefficient

I Tech  Storytel

Modest diversification

The 3 months correlation between ITECH and Storytel is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding I Tech and Storytel AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storytel 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 Storytel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storytel AB has no effect on the direction of I Tech i.e., I Tech and Storytel go up and down completely randomly.

Pair Corralation between I Tech and Storytel

Assuming the 90 days trading horizon I Tech is expected to generate 1.05 times more return on investment than Storytel. However, I Tech is 1.05 times more volatile than Storytel AB. It trades about 0.36 of its potential returns per unit of risk. Storytel AB is currently generating about 0.34 per unit of risk. If you would invest  4,940  in I Tech on September 29, 2024 and sell it today you would earn a total of  810.00  from holding I Tech or generate 16.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

I Tech  vs.  Storytel AB

I Tech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 9 (%) 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.

Storytel AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Storytel AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Storytel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with I Tech and Storytel

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

The idea behind I Tech and Storytel 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.