Correlation Between SUPERC and IOC
Can any of the company-specific risk be diversified away by investing in both SUPERC and IOC 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 SUPERC and IOC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SUPERC and IOC, you can compare the effects of market volatilities on SUPERC and IOC 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 SUPERC with a short position of IOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUPERC and IOC.
Diversification Opportunities for SUPERC and IOC
Excellent diversification
The 3 months correlation between SUPERC and IOC is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SUPERC and IOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOC and SUPERC 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 SUPERC are associated (or correlated) with IOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOC has no effect on the direction of SUPERC i.e., SUPERC and IOC go up and down completely randomly.
Pair Corralation between SUPERC and IOC
If you would invest 0.90 in IOC on August 27, 2024 and sell it today you would earn a total of 0.37 from holding IOC or generate 40.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.74% |
| Values | Daily Returns |
SUPERC vs. IOC
Performance |
| Timeline |
| SUPERC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IOC |
SUPERC and IOC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUPERC and IOC
The main advantage of trading using opposite SUPERC and IOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUPERC position performs unexpectedly, IOC 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 IOC will offset losses from the drop in IOC's long position.The idea behind SUPERC and IOC 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.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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