Correlation Between Photomyne and Isras Investment

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

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

Diversification Opportunities for Photomyne and Isras Investment

-0.13

Correlation Coefficient

Photomyne  Isras Investment

Good diversification

The 3 months correlation between Photomyne and Isras is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Photomyne and Isras Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isras Investment and Photomyne 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 Photomyne are associated (or correlated) with Isras Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isras Investment has no effect on the direction of Photomyne i.e., Photomyne and Isras Investment go up and down completely randomly.

Pair Corralation between Photomyne and Isras Investment

Assuming the 90 days trading horizon Photomyne is expected to generate 0.85 times more return on investment than Isras Investment. However, Photomyne is 1.18 times less risky than Isras Investment. It trades about 0.09 of its potential returns per unit of risk. Isras Investment is currently generating about -0.13 per unit of risk. If you would invest  291,700  in Photomyne on December 24, 2024 and sell it today you would earn a total of  18,200  from holding Photomyne or generate 6.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.08%
Values	Daily Returns

Photomyne  vs.  Isras Investment

Photomyne

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Photomyne are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Photomyne may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Isras Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Isras Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Photomyne and Isras Investment

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

The idea behind Photomyne and Isras Investment 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.