Correlation Between Summit Securities and Innova Captab

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Can any of the company-specific risk be diversified away by investing in both Summit Securities and Innova Captab 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 Summit Securities and Innova Captab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Securities Limited and Innova Captab Limited, you can compare the effects of market volatilities on Summit Securities and Innova Captab 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 Summit Securities with a short position of Innova Captab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Securities and Innova Captab.

Diversification Opportunities for Summit Securities and Innova Captab

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Summit and Innova is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Summit Securities Limited and Innova Captab Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innova Captab Limited and Summit Securities 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 Summit Securities Limited are associated (or correlated) with Innova Captab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innova Captab Limited has no effect on the direction of Summit Securities i.e., Summit Securities and Innova Captab go up and down completely randomly.

Pair Corralation between Summit Securities and Innova Captab

Assuming the 90 days trading horizon Summit Securities Limited is expected to generate 1.19 times more return on investment than Innova Captab. However, Summit Securities is 1.19 times more volatile than Innova Captab Limited. It trades about 0.12 of its potential returns per unit of risk. Innova Captab Limited is currently generating about 0.12 per unit of risk. If you would invest  66,135  in Summit Securities Limited on September 28, 2024 and sell it today you would earn a total of  238,035  from holding Summit Securities Limited or generate 359.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy50.41%
ValuesDaily Returns

Summit Securities Limited  vs.  Innova Captab Limited

 Performance 
       Timeline  
Summit Securities 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Securities Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Summit Securities unveiled solid returns over the last few months and may actually be approaching a breakup point.
Innova Captab Limited 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Innova Captab Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Innova Captab exhibited solid returns over the last few months and may actually be approaching a breakup point.

Summit Securities and Innova Captab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Summit Securities and Innova Captab

The main advantage of trading using opposite Summit Securities and Innova Captab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Securities position performs unexpectedly, Innova Captab 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 Innova Captab will offset losses from the drop in Innova Captab's long position.
The idea behind Summit Securities Limited and Innova Captab Limited 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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