Correlation Between Innelec Multimedia and Solutions
Can any of the company-specific risk be diversified away by investing in both Innelec Multimedia and Solutions 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 Innelec Multimedia and Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innelec Multimedia and Solutions 30 SE, you can compare the effects of market volatilities on Innelec Multimedia and Solutions 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 Innelec Multimedia with a short position of Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innelec Multimedia and Solutions.
Diversification Opportunities for Innelec Multimedia and Solutions
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innelec and Solutions is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Innelec Multimedia and Solutions 30 SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solutions 30 SE and Innelec Multimedia 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 Innelec Multimedia are associated (or correlated) with Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solutions 30 SE has no effect on the direction of Innelec Multimedia i.e., Innelec Multimedia and Solutions go up and down completely randomly.
Pair Corralation between Innelec Multimedia and Solutions
Assuming the 90 days trading horizon Innelec Multimedia is expected to generate 1.03 times more return on investment than Solutions. However, Innelec Multimedia is 1.03 times more volatile than Solutions 30 SE. It trades about -0.07 of its potential returns per unit of risk. Solutions 30 SE is currently generating about -0.11 per unit of risk. If you would invest 608.00 in Innelec Multimedia on September 14, 2024 and sell it today you would lose (318.00) from holding Innelec Multimedia or give up 52.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innelec Multimedia vs. Solutions 30 SE
Performance |
| Timeline |
| Innelec Multimedia |
| Solutions 30 SE |
Innelec Multimedia and Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innelec Multimedia and Solutions
The main advantage of trading using opposite Innelec Multimedia and Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innelec Multimedia position performs unexpectedly, Solutions 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 Solutions will offset losses from the drop in Solutions' long position.| Innelec Multimedia vs. Stef SA | Innelec Multimedia vs. Bonduelle SCA | Innelec Multimedia vs. Interparfums SA | Innelec Multimedia vs. Manitou BF SA |
| Solutions vs. LVMH Mot Hennessy | Solutions vs. LOreal SA | Solutions vs. Hermes International SCA | Solutions vs. Manitou BF SA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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