Correlation Between Induction Healthcare and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare and International Consolidated 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 Induction Healthcare and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Induction Healthcare Group and International Consolidated Airlines, you can compare the effects of market volatilities on Induction Healthcare and International Consolidated 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 Induction Healthcare with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and International Consolidated.
Diversification Opportunities for Induction Healthcare and International Consolidated
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Induction and International is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Induction Healthcare 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 Induction Healthcare Group are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and International Consolidated go up and down completely randomly.
Pair Corralation between Induction Healthcare and International Consolidated
Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the International Consolidated. In addition to that, Induction Healthcare is 2.12 times more volatile than International Consolidated Airlines. It trades about -0.03 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.08 per unit of volatility. If you would invest 16,952 in International Consolidated Airlines on October 25, 2024 and sell it today you would earn a total of 16,188 from holding International Consolidated Airlines or generate 95.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Induction Healthcare Group vs. International Consolidated Air
Performance |
| Timeline |
| Induction Healthcare |
| International Consolidated |
Induction Healthcare and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and International Consolidated
The main advantage of trading using opposite Induction Healthcare and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Induction Healthcare vs. MTI Wireless Edge | Induction Healthcare vs. Atresmedia | Induction Healthcare vs. Fevertree Drinks Plc | Induction Healthcare vs. Catalyst Media Group |
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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