Correlation Between IBF Financial and Concord Securities

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

Diversification Opportunities for IBF Financial and Concord Securities

0.29

Correlation Coefficient

IBF Financial  Concord Securities

Modest diversification

The 3 months correlation between IBF and Concord is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding IBF Financial Holdings and Concord Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Securities 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 Concord Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Securities has no effect on the direction of IBF Financial i.e., IBF Financial and Concord Securities go up and down completely randomly.

Pair Corralation between IBF Financial and Concord Securities

Assuming the 90 days trading horizon IBF Financial Holdings is expected to generate 1.22 times more return on investment than Concord Securities. However, IBF Financial is 1.22 times more volatile than Concord Securities Co. It trades about 0.27 of its potential returns per unit of risk. Concord Securities Co is currently generating about -0.25 per unit of risk. If you would invest  1,450  in IBF Financial Holdings on September 18, 2024 and sell it today you would earn a total of  60.00  from holding IBF Financial Holdings or generate 4.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

IBF Financial Holdings  vs.  Concord Securities Co

IBF Financial Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IBF Financial Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Concord Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Concord Securities 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 Concord Securities

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

The idea behind IBF Financial Holdings and Concord Securities Co 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.