Correlation Between Investment Trust and ILFS Investment

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

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

Diversification Opportunities for Investment Trust and ILFS Investment

0.81

Correlation Coefficient

Investment Trust  ILFS Investment

Very poor diversification

The 3 months correlation between Investment and ILFS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Investment Trust and ILFS Investment Managers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ILFS Investment Managers and Investment Trust 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 The Investment Trust are associated (or correlated) with ILFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ILFS Investment Managers has no effect on the direction of Investment Trust i.e., Investment Trust and ILFS Investment go up and down completely randomly.

Pair Corralation between Investment Trust and ILFS Investment

Assuming the 90 days trading horizon The Investment Trust is expected to under-perform the ILFS Investment. In addition to that, Investment Trust is 1.25 times more volatile than ILFS Investment Managers. It trades about -0.27 of its total potential returns per unit of risk. ILFS Investment Managers is currently generating about -0.12 per unit of volatility. If you would invest  1,099  in ILFS Investment Managers on December 26, 2024 and sell it today you would lose (179.00) from holding ILFS Investment Managers or give up 16.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

The Investment Trust  vs.  ILFS Investment Managers

Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ILFS Investment Managers

Risk-Adjusted Performance

Very Weak

Over the last 90 days ILFS Investment Managers 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Investment Trust and ILFS Investment

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

The idea behind The Investment Trust and ILFS Investment Managers 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 Stocks Directory module to find actively traded stocks across global markets.