Correlation Between Global Data and Infomedia
Can any of the company-specific risk be diversified away by investing in both Global Data 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 Global Data and Infomedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Data Centre and Infomedia, you can compare the effects of market volatilities on Global Data 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 Global Data with a short position of Infomedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Data and Infomedia.
Diversification Opportunities for Global Data and Infomedia
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Infomedia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Global Data Centre and Infomedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia and Global Data 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 Global Data Centre 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 Global Data i.e., Global Data and Infomedia go up and down completely randomly.
Pair Corralation between Global Data and Infomedia
Assuming the 90 days trading horizon Global Data is expected to generate 2.88 times less return on investment than Infomedia. But when comparing it to its historical volatility, Global Data Centre is 9.79 times less risky than Infomedia. It trades about 0.31 of its potential returns per unit of risk. Infomedia is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 135.00 in Infomedia on September 19, 2024 and sell it today you would earn a total of 5.00 from holding Infomedia or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Data Centre vs. Infomedia
Performance |
| Timeline |
| Global Data Centre |
| Infomedia |
Global Data and Infomedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Data and Infomedia
The main advantage of trading using opposite Global Data and Infomedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Data 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.| Global Data vs. Hudson Investment Group | Global Data vs. Skycity Entertainment Group | Global Data vs. Infomedia | Global Data vs. AiMedia Technologies |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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