Correlation Between Infomedia and Berkeley Energy
Can any of the company-specific risk be diversified away by investing in both Infomedia and Berkeley Energy 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 Berkeley Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infomedia and Berkeley Energy, you can compare the effects of market volatilities on Infomedia and Berkeley Energy 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 Berkeley Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infomedia and Berkeley Energy.
Diversification Opportunities for Infomedia and Berkeley Energy
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Infomedia and Berkeley is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia and Berkeley Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Energy 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 Berkeley Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Energy has no effect on the direction of Infomedia i.e., Infomedia and Berkeley Energy go up and down completely randomly.
Pair Corralation between Infomedia and Berkeley Energy
Assuming the 90 days trading horizon Infomedia is expected to under-perform the Berkeley Energy. But the stock apears to be less risky and, when comparing its historical volatility, Infomedia is 2.0 times less risky than Berkeley Energy. The stock trades about -0.11 of its potential returns per unit of risk. The Berkeley Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Berkeley Energy on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Berkeley Energy or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Infomedia vs. Berkeley Energy
Performance |
| Timeline |
| Infomedia |
| Berkeley Energy |
Infomedia and Berkeley Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infomedia and Berkeley Energy
The main advantage of trading using opposite Infomedia and Berkeley Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infomedia position performs unexpectedly, Berkeley Energy 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 Berkeley Energy will offset losses from the drop in Berkeley Energy's long position.The idea behind Infomedia and Berkeley Energy 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.| Berkeley Energy vs. Westpac Banking | Berkeley Energy vs. ABACUS STORAGE KING | Berkeley Energy vs. Odyssey Energy | Berkeley Energy vs. Ecofibre |
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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