Correlation Between Intema Solutions and Light Wonder

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

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

Diversification Opportunities for Intema Solutions and Light Wonder

0.0

Correlation Coefficient

Intema Solutions  Light Wonder

Pay attention - limited upside

The 3 months correlation between Intema and Light is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Intema Solutions and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder and Intema Solutions 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 Intema Solutions are associated (or correlated) with Light Wonder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Wonder has no effect on the direction of Intema Solutions i.e., Intema Solutions and Light Wonder go up and down completely randomly.

Pair Corralation between Intema Solutions and Light Wonder

If you would invest  9,504  in Light Wonder on November 28, 2024 and sell it today you would earn a total of  1,324  from holding Light Wonder or generate 13.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Intema Solutions  vs.  Light Wonder

Intema Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intema Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intema Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Light Wonder

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Intema Solutions and Light Wonder

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

The idea behind Intema Solutions and Light Wonder 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.