Correlation Between ILFS Investment and Hilton Metal

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

By analyzing existing cross correlation between ILFS Investment Managers and Hilton Metal Forging, you can compare the effects of market volatilities on ILFS Investment and Hilton Metal 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 ILFS Investment with a short position of Hilton Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ILFS Investment and Hilton Metal.

Diversification Opportunities for ILFS Investment and Hilton Metal

0.25

Correlation Coefficient

ILFS Investment  Hilton Metal

Modest diversification

The 3 months correlation between ILFS and Hilton is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and Hilton Metal Forging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Metal Forging and ILFS Investment 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 ILFS Investment Managers are associated (or correlated) with Hilton Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Metal Forging has no effect on the direction of ILFS Investment i.e., ILFS Investment and Hilton Metal go up and down completely randomly.

Pair Corralation between ILFS Investment and Hilton Metal

Assuming the 90 days trading horizon ILFS Investment Managers is expected to generate 1.03 times more return on investment than Hilton Metal. However, ILFS Investment is 1.03 times more volatile than Hilton Metal Forging. It trades about 0.05 of its potential returns per unit of risk. Hilton Metal Forging is currently generating about 0.02 per unit of risk. If you would invest  645.00  in ILFS Investment Managers on October 4, 2024 and sell it today you would earn a total of  477.00  from holding ILFS Investment Managers or generate 73.95% return on investment over 90 days.

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

ILFS Investment Managers  vs.  Hilton Metal Forging

ILFS Investment Managers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hilton Metal Forging

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ILFS Investment and Hilton Metal

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

The idea behind ILFS Investment Managers and Hilton Metal Forging 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.