Correlation Between Infomedia and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Infomedia and ACDC Metals 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 Infomedia and ACDC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infomedia and ACDC Metals, you can compare the effects of market volatilities on Infomedia and ACDC Metals 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 Infomedia with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infomedia and ACDC Metals.
Diversification Opportunities for Infomedia and ACDC Metals
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Infomedia and ACDC is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Infomedia 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 Infomedia are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Infomedia i.e., Infomedia and ACDC Metals go up and down completely randomly.
Pair Corralation between Infomedia and ACDC Metals
Assuming the 90 days trading horizon Infomedia is expected to generate 1.15 times more return on investment than ACDC Metals. However, Infomedia is 1.15 times more volatile than ACDC Metals. It trades about -0.15 of its potential returns per unit of risk. ACDC Metals is currently generating about -0.34 per unit of risk. If you would invest 149.00 in Infomedia on August 27, 2024 and sell it today you would lose (16.00) from holding Infomedia or give up 10.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infomedia vs. ACDC Metals
Performance |
| Timeline |
| Infomedia |
| ACDC Metals |
Infomedia and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infomedia and ACDC Metals
The main advantage of trading using opposite Infomedia and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infomedia position performs unexpectedly, ACDC Metals 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Infomedia vs. Energy Resources | Infomedia vs. 88 Energy | Infomedia vs. Amani Gold | Infomedia vs. A1 Investments Resources |
| ACDC Metals vs. Northern Star Resources | ACDC Metals vs. Evolution Mining | ACDC Metals vs. Bluescope Steel | ACDC Metals vs. Sandfire Resources NL |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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