Correlation Between Industrial Investment and Selan Exploration

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Can any of the company-specific risk be diversified away by investing in both Industrial Investment and Selan Exploration 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 Industrial Investment and Selan Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Investment Trust and Selan Exploration Technology, you can compare the effects of market volatilities on Industrial Investment and Selan Exploration 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 Selan Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Selan Exploration.

Diversification Opportunities for Industrial Investment and Selan Exploration

IndustrialSelanDiversified AwayIndustrialSelanDiversified Away100%
0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Industrial and Selan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Selan Exploration Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selan Exploration 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 Selan Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selan Exploration has no effect on the direction of Industrial Investment i.e., Industrial Investment and Selan Exploration go up and down completely randomly.

Pair Corralation between Industrial Investment and Selan Exploration

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 0.96 times more return on investment than Selan Exploration. However, Industrial Investment Trust is 1.04 times less risky than Selan Exploration. It trades about 0.11 of its potential returns per unit of risk. Selan Exploration Technology is currently generating about 0.06 per unit of risk. If you would invest  8,690  in Industrial Investment Trust on November 22, 2024 and sell it today you would earn a total of  25,025  from holding Industrial Investment Trust or generate 287.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.78%
ValuesDaily Returns

Industrial Investment Trust  vs.  Selan Exploration Technology

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-100
JavaScript chart by amCharts 3.21.15IITL SELAN
       Timeline  
Industrial Investment 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Industrial Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb300320340360380400420440
Selan Exploration 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Selan Exploration Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb550600650700750800850900950

Industrial Investment and Selan Exploration Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.34-3.25-2.16-1.07-0.01820.991.993.04.01 0.0300.0350.0400.0450.0500.055
JavaScript chart by amCharts 3.21.15IITL SELAN
       Returns  

Pair Trading with Industrial Investment and Selan Exploration

The main advantage of trading using opposite Industrial Investment and Selan Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment position performs unexpectedly, Selan Exploration 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 Selan Exploration will offset losses from the drop in Selan Exploration's long position.
The idea behind Industrial Investment Trust and Selan Exploration Technology 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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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 Stocks Directory module to find actively traded stocks across global markets.

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