Correlation Between ITEX Corp and Armada Mercantile

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

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

Diversification Opportunities for ITEX Corp and Armada Mercantile

0.46

Correlation Coefficient

ITEX Corp  Armada Mercantile

Very weak diversification

The 3 months correlation between ITEX and Armada is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ITEX Corp and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile and ITEX Corp 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 ITEX Corp are associated (or correlated) with Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of ITEX Corp i.e., ITEX Corp and Armada Mercantile go up and down completely randomly.

Pair Corralation between ITEX Corp and Armada Mercantile

Given the investment horizon of 90 days ITEX Corp is expected to under-perform the Armada Mercantile. But the pink sheet apears to be less risky and, when comparing its historical volatility, ITEX Corp is 1.27 times less risky than Armada Mercantile. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Armada Mercantile is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Armada Mercantile on July 29, 2025 and sell it today you would lose (9.00) from holding Armada Mercantile or give up 30.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

ITEX Corp  vs.  Armada Mercantile

ITEX Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days ITEX Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in November 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Armada Mercantile

Risk-Adjusted Performance

Weakest

Over the last 90 days Armada Mercantile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in November 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ITEX Corp and Armada Mercantile

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

The idea behind ITEX Corp and Armada Mercantile 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.