Correlation Between Medibank Private and Inventis

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

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

Diversification Opportunities for Medibank Private and Inventis

-0.5

Correlation Coefficient

Medibank Private  Inventis

Very good diversification

The 3 months correlation between Medibank and Inventis is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private and Inventis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventis and Medibank Private 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 Medibank Private are associated (or correlated) with Inventis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventis has no effect on the direction of Medibank Private i.e., Medibank Private and Inventis go up and down completely randomly.

Pair Corralation between Medibank Private and Inventis

Assuming the 90 days trading horizon Medibank Private is expected to generate 0.55 times more return on investment than Inventis. However, Medibank Private is 1.82 times less risky than Inventis. It trades about 0.07 of its potential returns per unit of risk. Inventis is currently generating about -0.09 per unit of risk. If you would invest  267.00  in Medibank Private on October 4, 2024 and sell it today you would earn a total of  112.00  from holding Medibank Private or generate 41.95% return on investment over 90 days.

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

Medibank Private  vs.  Inventis

Medibank Private

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medibank Private are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Medibank Private is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Inventis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inventis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Medibank Private and Inventis

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

The idea behind Medibank Private and Inventis 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.