Correlation Between Interlink Telecom and SAF Special

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

By analyzing existing cross correlation between Interlink Telecom Public and SAF Special Steel, you can compare the effects of market volatilities on Interlink Telecom and SAF Special 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 Interlink Telecom with a short position of SAF Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interlink Telecom and SAF Special.

Diversification Opportunities for Interlink Telecom and SAF Special

0.68

Correlation Coefficient

Interlink Telecom  SAF Special

Poor diversification

The 3 months correlation between Interlink and SAF is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Interlink Telecom Public and SAF Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAF Special Steel and Interlink Telecom 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 Interlink Telecom Public are associated (or correlated) with SAF Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAF Special Steel has no effect on the direction of Interlink Telecom i.e., Interlink Telecom and SAF Special go up and down completely randomly.

Pair Corralation between Interlink Telecom and SAF Special

Assuming the 90 days trading horizon Interlink Telecom Public is expected to under-perform the SAF Special. But the stock apears to be less risky and, when comparing its historical volatility, Interlink Telecom Public is 1.25 times less risky than SAF Special. The stock trades about -0.05 of its potential returns per unit of risk. The SAF Special Steel is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  74.00  in SAF Special Steel on October 12, 2024 and sell it today you would lose (25.00) from holding SAF Special Steel or give up 33.78% of portfolio value over 90 days.

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

Interlink Telecom Public  vs.  SAF Special Steel

Interlink Telecom Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interlink Telecom Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SAF Special Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAF Special Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Interlink Telecom and SAF Special

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

The idea behind Interlink Telecom Public and SAF Special Steel 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.