Correlation Between IBF Financial and APEX International

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

Diversification Opportunities for IBF Financial and APEX International

0.11

Correlation Coefficient

IBF Financial  APEX International

Average diversification

The 3 months correlation between IBF and APEX is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding IBF Financial Holdings and APEX International Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APEX International 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 APEX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APEX International has no effect on the direction of IBF Financial i.e., IBF Financial and APEX International go up and down completely randomly.

Pair Corralation between IBF Financial and APEX International

Assuming the 90 days trading horizon IBF Financial is expected to generate 4.37 times less return on investment than APEX International. But when comparing it to its historical volatility, IBF Financial Holdings is 2.98 times less risky than APEX International. It trades about 0.04 of its potential returns per unit of risk. APEX International Financial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,445  in APEX International Financial on October 7, 2024 and sell it today you would earn a total of  1,275  from holding APEX International Financial or generate 88.24% return on investment over 90 days.

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

IBF Financial Holdings  vs.  APEX International Financial

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.

APEX International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APEX International Financial 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with IBF Financial and APEX International

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

The idea behind IBF Financial Holdings and APEX International Financial 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.