Correlation Between EL D and Intertech

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Can any of the company-specific risk be diversified away by investing in both EL D and Intertech 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 EL D and Intertech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EL D Mouzakis and Intertech SA Inter, you can compare the effects of market volatilities on EL D and Intertech 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 EL D with a short position of Intertech. Check out your portfolio center. Please also check ongoing floating volatility patterns of EL D and Intertech.

Diversification Opportunities for EL D and Intertech

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between MOYZK and Intertech is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding EL D Mouzakis and Intertech SA Inter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertech SA Inter and EL D 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 EL D Mouzakis are associated (or correlated) with Intertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertech SA Inter has no effect on the direction of EL D i.e., EL D and Intertech go up and down completely randomly.

Pair Corralation between EL D and Intertech

Assuming the 90 days trading horizon EL D Mouzakis is expected to under-perform the Intertech. But the stock apears to be less risky and, when comparing its historical volatility, EL D Mouzakis is 1.11 times less risky than Intertech. The stock trades about -0.03 of its potential returns per unit of risk. The Intertech SA Inter is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Intertech SA Inter on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Intertech SA Inter or generate 2.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.31%
ValuesDaily Returns

EL D Mouzakis  vs.  Intertech SA Inter

 Performance 
       Timeline  
EL D Mouzakis 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EL D Mouzakis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EL D is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Intertech SA Inter 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Intertech SA Inter are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Intertech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

EL D and Intertech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EL D and Intertech

The main advantage of trading using opposite EL D and Intertech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EL D position performs unexpectedly, Intertech 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 Intertech will offset losses from the drop in Intertech's long position.
The idea behind EL D Mouzakis and Intertech SA Inter 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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