Correlation Between Infotel SA and Sidetrade
Can any of the company-specific risk be diversified away by investing in both Infotel SA and Sidetrade 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 Infotel SA and Sidetrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infotel SA and Sidetrade, you can compare the effects of market volatilities on Infotel SA and Sidetrade 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 Infotel SA with a short position of Sidetrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infotel SA and Sidetrade.
Diversification Opportunities for Infotel SA and Sidetrade
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Infotel and Sidetrade is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Infotel SA and Sidetrade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidetrade and Infotel SA 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 Infotel SA are associated (or correlated) with Sidetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidetrade has no effect on the direction of Infotel SA i.e., Infotel SA and Sidetrade go up and down completely randomly.
Pair Corralation between Infotel SA and Sidetrade
Assuming the 90 days trading horizon Infotel SA is expected to under-perform the Sidetrade. But the stock apears to be less risky and, when comparing its historical volatility, Infotel SA is 1.3 times less risky than Sidetrade. The stock trades about -0.05 of its potential returns per unit of risk. The Sidetrade is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 19,200 in Sidetrade on September 1, 2024 and sell it today you would earn a total of 3,200 from holding Sidetrade or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infotel SA vs. Sidetrade
Performance |
| Timeline |
| Infotel SA |
| Sidetrade |
Infotel SA and Sidetrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infotel SA and Sidetrade
The main advantage of trading using opposite Infotel SA and Sidetrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infotel SA position performs unexpectedly, Sidetrade 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 Sidetrade will offset losses from the drop in Sidetrade's long position.The idea behind Infotel SA and Sidetrade 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.| Sidetrade vs. Chargeurs SA | Sidetrade vs. Straumann Holding AG | Sidetrade vs. Manitou BF SA | Sidetrade vs. Amundi Index Solutions |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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