Correlation Between Top Frontier and Integrated Micro

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

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

Diversification Opportunities for Top Frontier and Integrated Micro

0.11

Correlation Coefficient

Top Frontier  Integrated Micro

Average diversification

The 3 months correlation between Top and Integrated is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and Integrated Micro Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Micro Ele and Top Frontier 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 Top Frontier Investment are associated (or correlated) with Integrated Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Micro Ele has no effect on the direction of Top Frontier i.e., Top Frontier and Integrated Micro go up and down completely randomly.

Pair Corralation between Top Frontier and Integrated Micro

Assuming the 90 days trading horizon Top Frontier Investment is expected to under-perform the Integrated Micro. In addition to that, Top Frontier is 1.65 times more volatile than Integrated Micro Electronics. It trades about -0.05 of its total potential returns per unit of risk. Integrated Micro Electronics is currently generating about -0.02 per unit of volatility. If you would invest  172.00  in Integrated Micro Electronics on August 31, 2024 and sell it today you would lose (8.00) from holding Integrated Micro Electronics or give up 4.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Top Frontier Investment  vs.  Integrated Micro Electronics

Top Frontier Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Integrated Micro Ele

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Micro Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Integrated Micro is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Top Frontier and Integrated Micro

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

The idea behind Top Frontier Investment and Integrated Micro Electronics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.