Correlation Between Industrial Investment and Indo Amines
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By analyzing existing cross correlation between Industrial Investment Trust and Indo Amines Limited, you can compare the effects of market volatilities on Industrial Investment and Indo Amines 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 Industrial Investment with a short position of Indo Amines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Indo Amines.
Diversification Opportunities for Industrial Investment and Indo Amines
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrial and Indo is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Indo Amines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Amines Limited and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with Indo Amines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Amines Limited has no effect on the direction of Industrial Investment i.e., Industrial Investment and Indo Amines go up and down completely randomly.
Pair Corralation between Industrial Investment and Indo Amines
Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 0.79 times more return on investment than Indo Amines. However, Industrial Investment Trust is 1.26 times less risky than Indo Amines. It trades about 0.25 of its potential returns per unit of risk. Indo Amines Limited is currently generating about 0.13 per unit of risk. If you would invest 32,400 in Industrial Investment Trust on August 30, 2024 and sell it today you would earn a total of 4,500 from holding Industrial Investment Trust or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Investment Trust vs. Indo Amines Limited
Performance |
| Timeline |
| Industrial Investment |
| Indo Amines Limited |
Industrial Investment and Indo Amines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Investment and Indo Amines
The main advantage of trading using opposite Industrial Investment and Indo Amines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment position performs unexpectedly, Indo Amines 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 Indo Amines will offset losses from the drop in Indo Amines' long position.The idea behind Industrial Investment Trust and Indo Amines Limited 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.
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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