Correlation Between SOCKET MOBILE and INDIKA ENERGY

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

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

Diversification Opportunities for SOCKET MOBILE and INDIKA ENERGY

-0.17

Correlation Coefficient

SOCKET MOBILE  INDIKA ENERGY

Good diversification

The 3 months correlation between SOCKET and INDIKA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SOCKET MOBILE NEW and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY and SOCKET MOBILE 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 SOCKET MOBILE NEW are associated (or correlated) with INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of SOCKET MOBILE i.e., SOCKET MOBILE and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between SOCKET MOBILE and INDIKA ENERGY

Assuming the 90 days trading horizon SOCKET MOBILE is expected to generate 1.52 times less return on investment than INDIKA ENERGY. But when comparing it to its historical volatility, SOCKET MOBILE NEW is 1.14 times less risky than INDIKA ENERGY. It trades about 0.25 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  7.05  in INDIKA ENERGY on October 23, 2024 and sell it today you would earn a total of  1.95  from holding INDIKA ENERGY or generate 27.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

SOCKET MOBILE NEW  vs.  INDIKA ENERGY

SOCKET MOBILE NEW

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOCKET MOBILE NEW are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, SOCKET MOBILE reported solid returns over the last few months and may actually be approaching a breakup point.

INDIKA ENERGY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INDIKA ENERGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, INDIKA ENERGY is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SOCKET MOBILE and INDIKA ENERGY

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

The idea behind SOCKET MOBILE NEW and INDIKA ENERGY 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.