Correlation Between Intact Financial and CHAR Technologies

Can any of the company-specific risk be diversified away by investing in both Intact Financial and CHAR Technologies 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 Intact Financial and CHAR Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intact Financial Corp and CHAR Technologies, you can compare the effects of market volatilities on Intact Financial and CHAR Technologies 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 Intact Financial with a short position of CHAR Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and CHAR Technologies.

Diversification Opportunities for Intact Financial and CHAR Technologies

-0.67

Correlation Coefficient

Intact Financial  CHAR Technologies

Excellent diversification

The 3 months correlation between Intact and CHAR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies and Intact Financial 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 Intact Financial Corp are associated (or correlated) with CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Intact Financial i.e., Intact Financial and CHAR Technologies go up and down completely randomly.

Pair Corralation between Intact Financial and CHAR Technologies

Assuming the 90 days trading horizon Intact Financial Corp is expected to generate 0.23 times more return on investment than CHAR Technologies. However, Intact Financial Corp is 4.44 times less risky than CHAR Technologies. It trades about 0.18 of its potential returns per unit of risk. CHAR Technologies is currently generating about -0.04 per unit of risk. If you would invest  2,135  in Intact Financial Corp on June 18, 2024 and sell it today you would earn a total of  245.00  from holding Intact Financial Corp or generate 11.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Intact Financial Corp  vs.  CHAR Technologies

Intact Financial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in October 2024.

CHAR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Intact Financial and CHAR Technologies

The main advantage of trading using opposite Intact Financial and CHAR Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial position performs unexpectedly, CHAR Technologies 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 CHAR Technologies will offset losses from the drop in CHAR Technologies' long position.

The idea behind Intact Financial Corp and CHAR Technologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.