Correlation Between Itay Financial and Payment Financial

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

By analyzing existing cross correlation between Itay Financial AA and Payment Financial Technologies, you can compare the effects of market volatilities on Itay Financial and Payment Financial 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 Itay Financial with a short position of Payment Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itay Financial and Payment Financial.

Diversification Opportunities for Itay Financial and Payment Financial

0.8

Correlation Coefficient

Itay Financial  Payment Financial

Very poor diversification

The 3 months correlation between Itay and Payment is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and Payment Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payment Financial and Itay Financial 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 Itay Financial AA are associated (or correlated) with Payment Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payment Financial has no effect on the direction of Itay Financial i.e., Itay Financial and Payment Financial go up and down completely randomly.

Pair Corralation between Itay Financial and Payment Financial

Assuming the 90 days trading horizon Itay Financial AA is expected to generate 15.89 times more return on investment than Payment Financial. However, Itay Financial is 15.89 times more volatile than Payment Financial Technologies. It trades about 0.04 of its potential returns per unit of risk. Payment Financial Technologies is currently generating about 0.04 per unit of risk. If you would invest  10,410  in Itay Financial AA on October 10, 2024 and sell it today you would earn a total of  28,790  from holding Itay Financial AA or generate 276.56% return on investment over 90 days.

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

Itay Financial AA  vs.  Payment Financial Technologies

Itay Financial AA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Itay Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Payment Financial

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payment Financial Technologies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Payment Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itay Financial and Payment Financial

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

The idea behind Itay Financial AA and Payment Financial Technologies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..