Correlation Between Intracom Holdings and Selected Textiles

Can any of the company-specific risk be diversified away by investing in both Intracom Holdings and Selected Textiles 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 Intracom Holdings and Selected Textiles into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intracom Holdings SA and Selected Textiles SA, you can compare the effects of market volatilities on Intracom Holdings and Selected Textiles 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 Intracom Holdings with a short position of Selected Textiles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intracom Holdings and Selected Textiles.

Diversification Opportunities for Intracom Holdings and Selected Textiles

0.68

Correlation Coefficient

Intracom Holdings  Selected Textiles

Poor diversification

The 3 months correlation between Intracom and Selected is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Intracom Holdings SA and Selected Textiles SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected Textiles and Intracom Holdings 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 Intracom Holdings SA are associated (or correlated) with Selected Textiles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected Textiles has no effect on the direction of Intracom Holdings i.e., Intracom Holdings and Selected Textiles go up and down completely randomly.

Pair Corralation between Intracom Holdings and Selected Textiles

If you would invest  12.00  in Selected Textiles SA on June 29, 2024 and sell it today you would earn a total of  0.00  from holding Selected Textiles SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Intracom Holdings SA  vs.  Selected Textiles SA

Intracom Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intracom Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Intracom Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Selected Textiles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Selected Textiles SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Selected Textiles is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intracom Holdings and Selected Textiles

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

The idea behind Intracom Holdings SA and Selected Textiles SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.