Correlation Between Take Two and Induction Healthcare
Can any of the company-specific risk be diversified away by investing in both Take Two and Induction Healthcare 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 Take Two and Induction Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and Induction Healthcare Group, you can compare the effects of market volatilities on Take Two and Induction Healthcare 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 Take Two with a short position of Induction Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Induction Healthcare.
Diversification Opportunities for Take Two and Induction Healthcare
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Take and Induction is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare and Take Two 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 Take Two Interactive Software are associated (or correlated) with Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Take Two i.e., Take Two and Induction Healthcare go up and down completely randomly.
Pair Corralation between Take Two and Induction Healthcare
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.93 times more return on investment than Induction Healthcare. However, Take Two Interactive Software is 1.07 times less risky than Induction Healthcare. It trades about 0.25 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about -0.29 per unit of risk. If you would invest 17,862 in Take Two Interactive Software on September 12, 2024 and sell it today you would earn a total of 1,166 from holding Take Two Interactive Software or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Take Two Interactive Software vs. Induction Healthcare Group
Performance |
| Timeline |
| Take Two Interactive |
| Induction Healthcare |
Take Two and Induction Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Induction Healthcare
The main advantage of trading using opposite Take Two and Induction Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Induction Healthcare 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 Induction Healthcare will offset losses from the drop in Induction Healthcare's long position.| Take Two vs. Hong Kong Land | Take Two vs. Neometals | Take Two vs. Coor Service Management | Take Two vs. Fidelity Sustainable USD |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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