Correlation Between INFORMATION SVC and AB SKF

Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC and AB SKF 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 AB SKF 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 AB SKF, you can compare the effects of market volatilities on INFORMATION SVC and AB SKF 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 AB SKF. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and AB SKF.

Diversification Opportunities for INFORMATION SVC and AB SKF

0.65

Correlation Coefficient

INFORMATION SVC  AB SKF

Poor diversification

The 3 months correlation between INFORMATION and SKFA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and AB SKF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SKF 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 AB SKF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SKF has no effect on the direction of INFORMATION SVC i.e., INFORMATION SVC and AB SKF go up and down completely randomly.

Pair Corralation between INFORMATION SVC and AB SKF

Assuming the 90 days horizon INFORMATION SVC GRP is expected to under-perform the AB SKF. But the stock apears to be less risky and, when comparing its historical volatility, INFORMATION SVC GRP is 2.0 times less risky than AB SKF. The stock trades about -0.02 of its potential returns per unit of risk. The AB SKF is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  628.00  in AB SKF on October 24, 2024 and sell it today you would earn a total of  1,288  from holding AB SKF or generate 205.1% return on investment over 90 days.

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

INFORMATION SVC GRP  vs.  AB SKF

INFORMATION SVC GRP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 7 (%) 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.

AB SKF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AB SKF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, AB SKF may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INFORMATION SVC and AB SKF

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

The idea behind INFORMATION SVC GRP and AB SKF 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.