Correlation Between Collins Foods and Infomedia
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Infomedia 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 Collins Foods and Infomedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Infomedia, you can compare the effects of market volatilities on Collins Foods and Infomedia 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 Collins Foods with a short position of Infomedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Infomedia.
Diversification Opportunities for Collins Foods and Infomedia
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Collins and Infomedia is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Infomedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia and Collins Foods 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 Collins Foods are associated (or correlated) with Infomedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia has no effect on the direction of Collins Foods i.e., Collins Foods and Infomedia go up and down completely randomly.
Pair Corralation between Collins Foods and Infomedia
Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Infomedia. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 1.33 times less risky than Infomedia. The stock trades about -0.05 of its potential returns per unit of risk. The Infomedia is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 152.00 in Infomedia on September 3, 2024 and sell it today you would lose (18.00) from holding Infomedia or give up 11.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Infomedia
Performance |
| Timeline |
| Collins Foods |
| Infomedia |
Collins Foods and Infomedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Infomedia
The main advantage of trading using opposite Collins Foods and Infomedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Infomedia 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 Infomedia will offset losses from the drop in Infomedia's long position.| Collins Foods vs. Westpac Banking | Collins Foods vs. Champion Iron | Collins Foods vs. iShares Global Healthcare | Collins Foods vs. Peel Mining |
| Infomedia vs. Commonwealth Bank | Infomedia vs. Commonwealth Bank of | Infomedia vs. Champion Iron | Infomedia vs. iShares Global Healthcare |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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