Correlation Between INFORMATION SVC and CRRC

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

Diversification Opportunities for INFORMATION SVC and CRRC

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between INFORMATION and CRRC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited and INFORMATION SVC 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 INFORMATION SVC GRP are associated (or correlated) with CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of INFORMATION SVC i.e., INFORMATION SVC and CRRC go up and down completely randomly.

Pair Corralation between INFORMATION SVC and CRRC

If you would invest  304.00  in INFORMATION SVC GRP on September 13, 2024 and sell it today you would earn a total of  44.00  from holding INFORMATION SVC GRP or generate 14.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

INFORMATION SVC GRP  vs.  CRRC Limited

 Performance 
       Timeline  
INFORMATION SVC GRP 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, INFORMATION SVC reported solid returns over the last few months and may actually be approaching a breakup point.
CRRC Limited 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CRRC Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CRRC reported solid returns over the last few months and may actually be approaching a breakup point.

INFORMATION SVC and CRRC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with INFORMATION SVC and CRRC

The main advantage of trading using opposite INFORMATION SVC and CRRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC position performs unexpectedly, CRRC 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 CRRC will offset losses from the drop in CRRC's long position.
The idea behind INFORMATION SVC GRP and CRRC Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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