Correlation Between Central Securities and IHIT

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

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

Diversification Opportunities for Central Securities and IHIT

-0.49

Correlation Coefficient

Central Securities  IHIT

Very good diversification

The 3 months correlation between Central and IHIT is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Central Securities and IHIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHIT and Central Securities 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 Central Securities are associated (or correlated) with IHIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHIT has no effect on the direction of Central Securities i.e., Central Securities and IHIT go up and down completely randomly.

Pair Corralation between Central Securities and IHIT

Considering the 90-day investment horizon Central Securities is expected to generate 1.18 times more return on investment than IHIT. However, Central Securities is 1.18 times more volatile than IHIT. It trades about 0.11 of its potential returns per unit of risk. IHIT is currently generating about -0.06 per unit of risk. If you would invest  3,162  in Central Securities on July 30, 2024 and sell it today you would earn a total of  1,502  from holding Central Securities or generate 47.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.56%
Values	Daily Returns

Central Securities  vs.  IHIT

Central Securities

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Securities are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Central Securities may actually be approaching a critical reversion point that can send shares even higher in November 2024.

IHIT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Central Securities and IHIT

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

The idea behind Central Securities and IHIT 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .