Correlation Between Infrastrutture Wireless and DISTRICT METALS

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

By analyzing existing cross correlation between Infrastrutture Wireless Italiane and DISTRICT METALS, you can compare the effects of market volatilities on Infrastrutture Wireless and DISTRICT METALS 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 Infrastrutture Wireless with a short position of DISTRICT METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infrastrutture Wireless and DISTRICT METALS.

Diversification Opportunities for Infrastrutture Wireless and DISTRICT METALS

0.63

Correlation Coefficient

Infrastrutture Wireless  DISTRICT METALS

Poor diversification

The 3 months correlation between Infrastrutture and DISTRICT is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Infrastrutture Wireless Italia and DISTRICT METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISTRICT METALS and Infrastrutture Wireless 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 Infrastrutture Wireless Italiane are associated (or correlated) with DISTRICT METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISTRICT METALS has no effect on the direction of Infrastrutture Wireless i.e., Infrastrutture Wireless and DISTRICT METALS go up and down completely randomly.

Pair Corralation between Infrastrutture Wireless and DISTRICT METALS

Assuming the 90 days horizon Infrastrutture Wireless Italiane is expected to generate 0.4 times more return on investment than DISTRICT METALS. However, Infrastrutture Wireless Italiane is 2.47 times less risky than DISTRICT METALS. It trades about 0.01 of its potential returns per unit of risk. DISTRICT METALS is currently generating about -0.05 per unit of risk. If you would invest  978.00  in Infrastrutture Wireless Italiane on December 30, 2024 and sell it today you would lose (2.00) from holding Infrastrutture Wireless Italiane or give up 0.2% of portfolio value over 90 days.

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

Infrastrutture Wireless Italia  vs.  DISTRICT METALS

Infrastrutture Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Infrastrutture Wireless is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

DISTRICT METALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DISTRICT METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Infrastrutture Wireless and DISTRICT METALS

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

The idea behind Infrastrutture Wireless Italiane and DISTRICT METALS 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.