Correlation Between INFORMATION SVC and AURUBIS AG

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

By analyzing existing cross correlation between INFORMATION SVC GRP and AURUBIS AG UNSPADR, you can compare the effects of market volatilities on INFORMATION SVC and AURUBIS AG 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 INFORMATION SVC with a short position of AURUBIS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and AURUBIS AG.

Diversification Opportunities for INFORMATION SVC and AURUBIS AG

0.71

Correlation Coefficient

INFORMATION SVC  AURUBIS AG

Poor diversification

The 3 months correlation between INFORMATION and AURUBIS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and AURUBIS AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS AG UNSPADR and INFORMATION SVC 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 INFORMATION SVC GRP are associated (or correlated) with AURUBIS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS AG UNSPADR has no effect on the direction of INFORMATION SVC i.e., INFORMATION SVC and AURUBIS AG go up and down completely randomly.

Pair Corralation between INFORMATION SVC and AURUBIS AG

Assuming the 90 days horizon INFORMATION SVC GRP is expected to generate 0.81 times more return on investment than AURUBIS AG. However, INFORMATION SVC GRP is 1.24 times less risky than AURUBIS AG. It trades about 0.16 of its potential returns per unit of risk. AURUBIS AG UNSPADR is currently generating about 0.01 per unit of risk. If you would invest  304.00  in INFORMATION SVC GRP on September 21, 2024 and sell it today you would earn a total of  22.00  from holding INFORMATION SVC GRP or generate 7.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

INFORMATION SVC GRP  vs.  AURUBIS AG UNSPADR

INFORMATION SVC GRP

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INFORMATION SVC reported solid returns over the last few months and may actually be approaching a breakup point.

AURUBIS AG UNSPADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AURUBIS AG UNSPADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AURUBIS AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INFORMATION SVC and AURUBIS AG

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

The idea behind INFORMATION SVC GRP and AURUBIS AG UNSPADR 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.