Correlation Between De Licacy and IBF Financial

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

By analyzing existing cross correlation between De Licacy Industrial and IBF Financial Holdings, you can compare the effects of market volatilities on De Licacy and IBF Financial 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 De Licacy with a short position of IBF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Licacy and IBF Financial.

Diversification Opportunities for De Licacy and IBF Financial

-0.06

Correlation Coefficient

De Licacy  IBF Financial

Good diversification

The 3 months correlation between 1464 and IBF is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding De Licacy Industrial and IBF Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBF Financial Holdings and De Licacy 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 De Licacy Industrial are associated (or correlated) with IBF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBF Financial Holdings has no effect on the direction of De Licacy i.e., De Licacy and IBF Financial go up and down completely randomly.

Pair Corralation between De Licacy and IBF Financial

Assuming the 90 days trading horizon De Licacy Industrial is expected to under-perform the IBF Financial. In addition to that, De Licacy is 2.3 times more volatile than IBF Financial Holdings. It trades about -0.07 of its total potential returns per unit of risk. IBF Financial Holdings is currently generating about -0.09 per unit of volatility. If you would invest  1,495  in IBF Financial Holdings on October 8, 2024 and sell it today you would lose (30.00) from holding IBF Financial Holdings or give up 2.01% of portfolio value over 90 days.

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

De Licacy Industrial  vs.  IBF Financial Holdings

De Licacy Industrial

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Licacy Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, De Licacy showed solid returns over the last few months and may actually be approaching a breakup point.

IBF Financial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IBF Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IBF Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with De Licacy and IBF Financial

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

The idea behind De Licacy Industrial and IBF Financial Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.