Correlation Between Online Brands and I Tech

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

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

Diversification Opportunities for Online Brands and I Tech

-0.31

Correlation Coefficient

Online Brands  I Tech

Very good diversification

The 3 months correlation between Online and ITECH is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Online Brands Nordic and I Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Tech and Online Brands 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 Online Brands Nordic are associated (or correlated) with I Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Tech has no effect on the direction of Online Brands i.e., Online Brands and I Tech go up and down completely randomly.

Pair Corralation between Online Brands and I Tech

Assuming the 90 days trading horizon Online Brands Nordic is expected to under-perform the I Tech. But the stock apears to be less risky and, when comparing its historical volatility, Online Brands Nordic is 1.11 times less risky than I Tech. The stock trades about -0.02 of its potential returns per unit of risk. The I Tech is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  7,899  in I Tech on April 23, 2025 and sell it today you would earn a total of  3,451  from holding I Tech or generate 43.69% return on investment over 90 days.

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

Online Brands Nordic  vs.  I Tech

Online Brands Nordic

Risk-Adjusted Performance

Very Weak

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

I Tech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, I Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Online Brands and I Tech

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

The idea behind Online Brands Nordic and I Tech 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.