Correlation Between Intouch Holdings and Eureka Design

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

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

Diversification Opportunities for Intouch Holdings and Eureka Design

0.77

Correlation Coefficient

Intouch Holdings  Eureka Design

Poor diversification

The 3 months correlation between Intouch and Eureka is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Holdings Public and Eureka Design Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Design Public and Intouch 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 Intouch Holdings Public are associated (or correlated) with Eureka Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Design Public has no effect on the direction of Intouch Holdings i.e., Intouch Holdings and Eureka Design go up and down completely randomly.

Pair Corralation between Intouch Holdings and Eureka Design

Assuming the 90 days trading horizon Intouch Holdings Public is expected to generate 1.43 times more return on investment than Eureka Design. However, Intouch Holdings is 1.43 times more volatile than Eureka Design Public. It trades about -0.06 of its potential returns per unit of risk. Eureka Design Public is currently generating about -0.24 per unit of risk. If you would invest  6,800  in Intouch Holdings Public on February 3, 2024 and sell it today you would lose (100.00) from holding Intouch Holdings Public or give up 1.47% of portfolio value over 90 days.

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

Intouch Holdings Public  vs.  Eureka Design Public

Intouch Holdings Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intouch Holdings Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Eureka Design Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eureka Design Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Intouch Holdings and Eureka Design

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

The idea behind Intouch Holdings Public and Eureka Design Public 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.