Correlation Between POWERGRID Infrastructure and Industrial Investment

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

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

Diversification Opportunities for POWERGRID Infrastructure and Industrial Investment

-0.15

Correlation Coefficient

POWERGRID Infrastructure  Industrial Investment

Good diversification

The 3 months correlation between POWERGRID and Industrial is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding POWERGRID Infrastructure Inves and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and POWERGRID Infrastructure 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 POWERGRID Infrastructure Investment are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of POWERGRID Infrastructure i.e., POWERGRID Infrastructure and Industrial Investment go up and down completely randomly.

Pair Corralation between POWERGRID Infrastructure and Industrial Investment

Assuming the 90 days trading horizon POWERGRID Infrastructure Investment is expected to generate 0.18 times more return on investment than Industrial Investment. However, POWERGRID Infrastructure Investment is 5.67 times less risky than Industrial Investment. It trades about -0.38 of its potential returns per unit of risk. Industrial Investment Trust is currently generating about -0.41 per unit of risk. If you would invest  8,748  in POWERGRID Infrastructure Investment on October 12, 2024 and sell it today you would lose (361.00) from holding POWERGRID Infrastructure Investment or give up 4.13% of portfolio value over 90 days.

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

POWERGRID Infrastructure Inves  vs.  Industrial Investment Trust

POWERGRID Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POWERGRID Infrastructure Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, POWERGRID Infrastructure is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Industrial Investment

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Industrial Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with POWERGRID Infrastructure and Industrial Investment

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

The idea behind POWERGRID Infrastructure Investment and Industrial Investment Trust 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.