Correlation Between Invisio Communications and White Pearl

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

By analyzing existing cross correlation between Invisio Communications AB and White Pearl Technology, you can compare the effects of market volatilities on Invisio Communications and White Pearl 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 Invisio Communications with a short position of White Pearl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invisio Communications and White Pearl.

Diversification Opportunities for Invisio Communications and White Pearl

0.53

Correlation Coefficient

Invisio Communications  White Pearl

Very weak diversification

The 3 months correlation between Invisio and White is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Invisio Communications AB and White Pearl Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Pearl Technology and Invisio Communications 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 Invisio Communications AB are associated (or correlated) with White Pearl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Pearl Technology has no effect on the direction of Invisio Communications i.e., Invisio Communications and White Pearl go up and down completely randomly.

Pair Corralation between Invisio Communications and White Pearl

Assuming the 90 days trading horizon Invisio Communications AB is expected to under-perform the White Pearl. But the stock apears to be less risky and, when comparing its historical volatility, Invisio Communications AB is 1.49 times less risky than White Pearl. The stock trades about -0.32 of its potential returns per unit of risk. The White Pearl Technology is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  580.00  in White Pearl Technology on October 8, 2024 and sell it today you would earn a total of  40.00  from holding White Pearl Technology or generate 6.9% return on investment over 90 days.

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

Invisio Communications AB  vs.  White Pearl Technology

Invisio Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invisio Communications AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Invisio Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

White Pearl Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in White Pearl Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, White Pearl sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invisio Communications and White Pearl

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

The idea behind Invisio Communications AB and White Pearl Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.