Correlation Between InfoBank and NewFlex Technology
Can any of the company-specific risk be diversified away by investing in both InfoBank and NewFlex Technology 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 InfoBank and NewFlex Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InfoBank and NewFlex Technology Co, you can compare the effects of market volatilities on InfoBank and NewFlex Technology 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 InfoBank with a short position of NewFlex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfoBank and NewFlex Technology.
Diversification Opportunities for InfoBank and NewFlex Technology
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between InfoBank and NewFlex is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and NewFlex Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFlex Technology and InfoBank 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 InfoBank are associated (or correlated) with NewFlex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFlex Technology has no effect on the direction of InfoBank i.e., InfoBank and NewFlex Technology go up and down completely randomly.
Pair Corralation between InfoBank and NewFlex Technology
Assuming the 90 days trading horizon InfoBank is expected to under-perform the NewFlex Technology. But the stock apears to be less risky and, when comparing its historical volatility, InfoBank is 1.62 times less risky than NewFlex Technology. The stock trades about -0.04 of its potential returns per unit of risk. The NewFlex Technology Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 568,000 in NewFlex Technology Co on August 29, 2024 and sell it today you would lose (87,500) from holding NewFlex Technology Co or give up 15.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfoBank vs. NewFlex Technology Co
Performance |
| Timeline |
| InfoBank |
| NewFlex Technology |
InfoBank and NewFlex Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfoBank and NewFlex Technology
The main advantage of trading using opposite InfoBank and NewFlex Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfoBank position performs unexpectedly, NewFlex Technology 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 NewFlex Technology will offset losses from the drop in NewFlex Technology's long position.| InfoBank vs. Daou Data Corp | InfoBank vs. Busan Industrial Co | InfoBank vs. Busan Ind | InfoBank vs. Shinhan WTI Futures |
| NewFlex Technology vs. Daou Data Corp | NewFlex Technology vs. Busan Industrial Co | NewFlex Technology vs. Busan Ind | NewFlex Technology vs. Shinhan WTI Futures |
Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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