Correlation Between IBF Financial and Sinopac Financial

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

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

Diversification Opportunities for IBF Financial and Sinopac Financial

0.84

Correlation Coefficient

IBF Financial  Sinopac Financial

Very poor diversification

The 3 months correlation between IBF and Sinopac is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding IBF Financial Holdings and Sinopac Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopac Financial and IBF Financial 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 IBF Financial Holdings are associated (or correlated) with Sinopac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopac Financial has no effect on the direction of IBF Financial i.e., IBF Financial and Sinopac Financial go up and down completely randomly.

Pair Corralation between IBF Financial and Sinopac Financial

Assuming the 90 days trading horizon IBF Financial Holdings is expected to under-perform the Sinopac Financial. In addition to that, IBF Financial is 1.19 times more volatile than Sinopac Financial Holdings. It trades about -0.23 of its total potential returns per unit of risk. Sinopac Financial Holdings is currently generating about -0.13 per unit of volatility. If you would invest  2,340  in Sinopac Financial Holdings on December 23, 2024 and sell it today you would lose (130.00) from holding Sinopac Financial Holdings or give up 5.56% of portfolio value over 90 days.

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

IBF Financial Holdings  vs.  Sinopac Financial Holdings

IBF Financial Holdings

Risk-Adjusted Performance

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sinopac Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sinopac Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sinopac 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 IBF Financial and Sinopac Financial

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

The idea behind IBF Financial Holdings and Sinopac 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.