Correlation Between ITI and Indo Amines

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

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

Diversification Opportunities for ITI and Indo Amines

0.18

Correlation Coefficient

ITI  Indo Amines

Average diversification

The 3 months correlation between ITI and Indo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ITI Limited and Indo Amines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Amines Limited and ITI 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 ITI Limited are associated (or correlated) with Indo Amines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Amines Limited has no effect on the direction of ITI i.e., ITI and Indo Amines go up and down completely randomly.

Pair Corralation between ITI and Indo Amines

Assuming the 90 days trading horizon ITI Limited is expected to under-perform the Indo Amines. In addition to that, ITI is 1.03 times more volatile than Indo Amines Limited. It trades about 0.0 of its total potential returns per unit of risk. Indo Amines Limited is currently generating about 0.0 per unit of volatility. If you would invest  18,344  in Indo Amines Limited on September 2, 2024 and sell it today you would lose (881.00) from holding Indo Amines Limited or give up 4.8% of portfolio value over 90 days.

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

ITI Limited  vs.  Indo Amines Limited

ITI Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITI Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ITI is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Indo Amines Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Amines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Indo Amines is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ITI and Indo Amines

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

The idea behind ITI Limited and Indo Amines 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.