Correlation Between New Tech and IMC SA
Can any of the company-specific risk be diversified away by investing in both New Tech and IMC SA 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 New Tech and IMC SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Tech Venture and IMC SA, you can compare the effects of market volatilities on New Tech and IMC SA 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 New Tech with a short position of IMC SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and IMC SA.
Diversification Opportunities for New Tech and IMC SA
Very good diversification
The 3 months correlation between New and IMC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture and IMC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMC SA and New Tech 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 New Tech Venture are associated (or correlated) with IMC SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMC SA has no effect on the direction of New Tech i.e., New Tech and IMC SA go up and down completely randomly.
Pair Corralation between New Tech and IMC SA
Assuming the 90 days trading horizon New Tech Venture is expected to under-perform the IMC SA. In addition to that, New Tech is 1.09 times more volatile than IMC SA. It trades about -0.14 of its total potential returns per unit of risk. IMC SA is currently generating about 0.15 per unit of volatility. If you would invest 1,230 in IMC SA on September 12, 2024 and sell it today you would earn a total of 370.00 from holding IMC SA or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 60.32% |
| Values | Daily Returns |
New Tech Venture vs. IMC SA
Performance |
| Timeline |
| New Tech Venture |
| IMC SA |
New Tech and IMC SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Tech and IMC SA
The main advantage of trading using opposite New Tech and IMC SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Tech position performs unexpectedly, IMC SA 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 IMC SA will offset losses from the drop in IMC SA's long position.| New Tech vs. Kool2play SA | New Tech vs. Alior Bank SA | New Tech vs. Santander Bank Polska | New Tech vs. Quantum Software SA |
| IMC SA vs. LSI Software SA | IMC SA vs. Movie Games SA | IMC SA vs. Echo Investment SA | IMC SA vs. Carlson Investments SA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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