Correlation Between Design and Itcen
Can any of the company-specific risk be diversified away by investing in both Design and Itcen 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 Design and Itcen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Design Co and Itcen Co, you can compare the effects of market volatilities on Design and Itcen 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 Design with a short position of Itcen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design and Itcen.
Diversification Opportunities for Design and Itcen
Poor diversification
The 3 months correlation between Design and Itcen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Design Co and Itcen Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itcen and Design 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 Design Co are associated (or correlated) with Itcen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itcen has no effect on the direction of Design i.e., Design and Itcen go up and down completely randomly.
Pair Corralation between Design and Itcen
Assuming the 90 days trading horizon Design Co is expected to under-perform the Itcen. In addition to that, Design is 2.47 times more volatile than Itcen Co. It trades about -0.01 of its total potential returns per unit of risk. Itcen Co is currently generating about 0.02 per unit of volatility. If you would invest 524,000 in Itcen Co on October 14, 2024 and sell it today you would earn a total of 12,000 from holding Itcen Co or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.56% |
| Values | Daily Returns |
Design Co vs. Itcen Co
Performance |
| Timeline |
| Design |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Itcen |
Design and Itcen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Design and Itcen
The main advantage of trading using opposite Design and Itcen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design position performs unexpectedly, Itcen 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 Itcen will offset losses from the drop in Itcen's long position.The idea behind Design Co and Itcen Co 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.| Itcen vs. Pan Entertainment Co | Itcen vs. SAMG Entertainment Co | Itcen vs. Alton Sports CoLtd | Itcen vs. Daou Data Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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