Correlation Between N Citron and InnoTherapy
Can any of the company-specific risk be diversified away by investing in both N Citron and InnoTherapy 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 N Citron and InnoTherapy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between N Citron and InnoTherapy, you can compare the effects of market volatilities on N Citron and InnoTherapy 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 N Citron with a short position of InnoTherapy. Check out your portfolio center. Please also check ongoing floating volatility patterns of N Citron and InnoTherapy.
Diversification Opportunities for N Citron and InnoTherapy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 101400 and InnoTherapy is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding N Citron and InnoTherapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnoTherapy and N Citron 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 N Citron are associated (or correlated) with InnoTherapy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnoTherapy has no effect on the direction of N Citron i.e., N Citron and InnoTherapy go up and down completely randomly.
Pair Corralation between N Citron and InnoTherapy
Assuming the 90 days trading horizon N Citron is expected to under-perform the InnoTherapy. But the stock apears to be less risky and, when comparing its historical volatility, N Citron is 1.39 times less risky than InnoTherapy. The stock trades about -0.09 of its potential returns per unit of risk. The InnoTherapy is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 835,000 in InnoTherapy on November 8, 2024 and sell it today you would earn a total of 177,000 from holding InnoTherapy or generate 21.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
N Citron vs. InnoTherapy
Performance |
| Timeline |
| N Citron |
| InnoTherapy |
N Citron and InnoTherapy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with N Citron and InnoTherapy
The main advantage of trading using opposite N Citron and InnoTherapy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if N Citron position performs unexpectedly, InnoTherapy 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 InnoTherapy will offset losses from the drop in InnoTherapy's long position.| N Citron vs. Samsung Electronics Co | N Citron vs. Samsung Electronics Co | N Citron vs. Hyundai Motor Co | N Citron vs. Hyundai Motor |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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