Correlation Between NYSE Composite and Intal High

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

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

Diversification Opportunities for NYSE Composite and Intal High

0.76

Correlation Coefficient

NYSE Composite  Intal High

Poor diversification

The 3 months correlation between NYSE and Intal is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Intal High Relative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intal High Relative and NYSE Composite 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 NYSE Composite are associated (or correlated) with Intal High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intal High Relative has no effect on the direction of NYSE Composite i.e., NYSE Composite and Intal High go up and down completely randomly.

Pair Corralation between NYSE Composite and Intal High

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Intal High. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 1.03 times less risky than Intal High. The index trades about -0.02 of its potential returns per unit of risk. The Intal High Relative is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,296  in Intal High Relative on December 1, 2024 and sell it today you would earn a total of  38.00  from holding Intal High Relative or generate 2.93% return on investment over 90 days.

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

NYSE Composite  vs.  Intal High Relative

Pair Trading with NYSE Composite and Intal High

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

The idea behind NYSE Composite and Intal High Relative 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.