Correlation Between Microfriend and Innowireless
Can any of the company-specific risk be diversified away by investing in both Microfriend and Innowireless 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 Microfriend and Innowireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Innowireless Co, you can compare the effects of market volatilities on Microfriend and Innowireless 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 Microfriend with a short position of Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Innowireless.
Diversification Opportunities for Microfriend and Innowireless
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microfriend and Innowireless is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless and Microfriend 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 Microfriend are associated (or correlated) with Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of Microfriend i.e., Microfriend and Innowireless go up and down completely randomly.
Pair Corralation between Microfriend and Innowireless
Assuming the 90 days trading horizon Microfriend is expected to under-perform the Innowireless. In addition to that, Microfriend is 2.02 times more volatile than Innowireless Co. It trades about -0.08 of its total potential returns per unit of risk. Innowireless Co is currently generating about -0.09 per unit of volatility. If you would invest 2,765,000 in Innowireless Co on August 25, 2024 and sell it today you would lose (967,000) from holding Innowireless Co or give up 34.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.81% |
| Values | Daily Returns |
Microfriend vs. Innowireless Co
Performance |
| Timeline |
| Microfriend |
| Innowireless |
Microfriend and Innowireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Innowireless
The main advantage of trading using opposite Microfriend and Innowireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Innowireless 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 Innowireless will offset losses from the drop in Innowireless' long position.| Microfriend vs. PJ Metal Co | Microfriend vs. Eagon Industrial Co | Microfriend vs. Lotte Data Communication | Microfriend vs. Mobile Appliance |
| Innowireless vs. AptaBio Therapeutics | Innowireless vs. Daewoo SBI SPAC | Innowireless vs. Dream Security co | Innowireless vs. Microfriend |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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