Correlation Between Paramount Communications and ILFS Investment

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

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

Diversification Opportunities for Paramount Communications and ILFS Investment

0.14

Correlation Coefficient

Paramount Communications  ILFS Investment

Average diversification

The 3 months correlation between Paramount and ILFS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Communications Limit and ILFS Investment Managers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ILFS Investment Managers and Paramount 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 Paramount Communications Limited are associated (or correlated) with ILFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ILFS Investment Managers has no effect on the direction of Paramount Communications i.e., Paramount Communications and ILFS Investment go up and down completely randomly.

Pair Corralation between Paramount Communications and ILFS Investment

Assuming the 90 days trading horizon Paramount Communications Limited is expected to under-perform the ILFS Investment. In addition to that, Paramount Communications is 1.13 times more volatile than ILFS Investment Managers. It trades about -0.18 of its total potential returns per unit of risk. ILFS Investment Managers is currently generating about -0.04 per unit of volatility. If you would invest  1,113  in ILFS Investment Managers on October 23, 2024 and sell it today you would lose (29.00) from holding ILFS Investment Managers or give up 2.61% of portfolio value over 90 days.

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

Paramount Communications Limit  vs.  ILFS Investment Managers

Paramount Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Communications Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, Paramount Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ILFS Investment Managers

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ILFS Investment Managers are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ILFS Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Paramount Communications and ILFS Investment

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

The idea behind Paramount Communications Limited and ILFS Investment Managers 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.