Correlation Between ILFS Investment and Investment Trust

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

Diversification Opportunities for ILFS Investment and Investment Trust

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between ILFS and Investment is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and The Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Trust and ILFS 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 ILFS Investment Managers are associated (or correlated) with Investment Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Trust has no effect on the direction of ILFS Investment i.e., ILFS Investment and Investment Trust go up and down completely randomly.

Pair Corralation between ILFS Investment and Investment Trust

Assuming the 90 days trading horizon ILFS Investment Managers is expected to generate 1.18 times more return on investment than Investment Trust. However, ILFS Investment is 1.18 times more volatile than The Investment Trust. It trades about 0.07 of its potential returns per unit of risk. The Investment Trust is currently generating about 0.01 per unit of risk. If you would invest  1,181  in ILFS Investment Managers on September 12, 2024 and sell it today you would earn a total of  41.00  from holding ILFS Investment Managers or generate 3.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

ILFS Investment Managers  vs.  The Investment Trust

 Performance 
       Timeline  
ILFS Investment Managers 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ILFS Investment Managers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ILFS Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Investment Trust 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Investment Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

ILFS Investment and Investment Trust Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ILFS Investment and Investment Trust

The main advantage of trading using opposite ILFS Investment and Investment Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ILFS Investment position performs unexpectedly, Investment Trust 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 Investment Trust will offset losses from the drop in Investment Trust's long position.
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The idea behind ILFS Investment Managers and The Investment Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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