Correlation Between Infomedia and EMvision Medical
Can any of the company-specific risk be diversified away by investing in both Infomedia and EMvision Medical 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 EMvision Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infomedia and EMvision Medical Devices, you can compare the effects of market volatilities on Infomedia and EMvision Medical 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 EMvision Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infomedia and EMvision Medical.
Diversification Opportunities for Infomedia and EMvision Medical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Infomedia and EMvision is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Infomedia and EMvision Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMvision Medical Devices 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 EMvision Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMvision Medical Devices has no effect on the direction of Infomedia i.e., Infomedia and EMvision Medical go up and down completely randomly.
Pair Corralation between Infomedia and EMvision Medical
Assuming the 90 days trading horizon Infomedia is expected to generate 0.71 times more return on investment than EMvision Medical. However, Infomedia is 1.41 times less risky than EMvision Medical. It trades about 0.09 of its potential returns per unit of risk. EMvision Medical Devices is currently generating about -0.01 per unit of risk. 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 | 95.65% |
| Values | Daily Returns |
Infomedia vs. EMvision Medical Devices
Performance |
| Timeline |
| Infomedia |
| EMvision Medical Devices |
Infomedia and EMvision Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infomedia and EMvision Medical
The main advantage of trading using opposite Infomedia and EMvision Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infomedia position performs unexpectedly, EMvision Medical 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 EMvision Medical will offset losses from the drop in EMvision Medical's long position.The idea behind Infomedia and EMvision Medical Devices 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.| EMvision Medical vs. Perseus Mining | EMvision Medical vs. Alto Metals | EMvision Medical vs. Hutchison Telecommunications | EMvision Medical vs. Dexus Convenience Retail |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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