Correlation Between Induction Healthcare and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Induction Healthcare and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Intermediate Capital.
Diversification Opportunities for Induction Healthcare and Intermediate Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Induction and Intermediate is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and Intermediate Capital go up and down completely randomly.
Pair Corralation between Induction Healthcare and Intermediate Capital
Assuming the 90 days trading horizon Induction Healthcare Group is expected to generate 1.57 times more return on investment than Intermediate Capital. However, Induction Healthcare is 1.57 times more volatile than Intermediate Capital Group. It trades about 0.14 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.03 per unit of risk. If you would invest 825.00 in Induction Healthcare Group on September 4, 2024 and sell it today you would earn a total of 75.00 from holding Induction Healthcare Group or generate 9.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Induction Healthcare Group vs. Intermediate Capital Group
Performance |
Timeline |
Induction Healthcare |
Intermediate Capital |
Induction Healthcare and Intermediate Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Induction Healthcare and Intermediate Capital
The main advantage of trading using opposite Induction Healthcare and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Hyundai Motor | Induction Healthcare vs. Toyota Motor Corp |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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