Correlation Between IBF Financial and Niching Industrial

Can any of the company-specific risk be diversified away by investing in both IBF Financial and Niching Industrial 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 Niching Industrial 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 Niching Industrial, you can compare the effects of market volatilities on IBF Financial and Niching Industrial 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 Niching Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBF Financial and Niching Industrial.

Diversification Opportunities for IBF Financial and Niching Industrial

0.28

Correlation Coefficient

IBF Financial  Niching Industrial

Modest diversification

The 3 months correlation between IBF and Niching is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding IBF Financial Holdings and Niching Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niching Industrial 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 Niching Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niching Industrial has no effect on the direction of IBF Financial i.e., IBF Financial and Niching Industrial go up and down completely randomly.

Pair Corralation between IBF Financial and Niching Industrial

Assuming the 90 days trading horizon IBF Financial Holdings is expected to under-perform the Niching Industrial. But the stock apears to be less risky and, when comparing its historical volatility, IBF Financial Holdings is 1.13 times less risky than Niching Industrial. The stock trades about -0.24 of its potential returns per unit of risk. The Niching Industrial is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  7,780  in Niching Industrial on October 22, 2024 and sell it today you would lose (310.00) from holding Niching Industrial or give up 3.98% of portfolio value over 90 days.

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

IBF Financial Holdings  vs.  Niching Industrial

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.

Niching Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Niching Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with IBF Financial and Niching Industrial

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

The idea behind IBF Financial Holdings and Niching Industrial 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.