Correlation Between Public Power and Intracom Holdings

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

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

Diversification Opportunities for Public Power and Intracom Holdings

0.41

Correlation Coefficient

Public Power  Intracom Holdings

Very weak diversification

The 3 months correlation between Public and Intracom is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Public Power and Intracom Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intracom Holdings and Public Power 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 Public Power are associated (or correlated) with Intracom Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intracom Holdings has no effect on the direction of Public Power i.e., Public Power and Intracom Holdings go up and down completely randomly.

Pair Corralation between Public Power and Intracom Holdings

Assuming the 90 days trading horizon Public Power is expected to generate 0.73 times more return on investment than Intracom Holdings. However, Public Power is 1.36 times less risky than Intracom Holdings. It trades about 0.16 of its potential returns per unit of risk. Intracom Holdings SA is currently generating about 0.08 per unit of risk. If you would invest  1,234  in Public Power on December 31, 2024 and sell it today you would earn a total of  172.00  from holding Public Power or generate 13.94% return on investment over 90 days.

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

Public Power  vs.  Intracom Holdings SA

Public Power

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Public Power are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Public Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Intracom Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intracom Holdings SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intracom Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Public Power and Intracom Holdings

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

The idea behind Public Power and Intracom Holdings SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.