Correlation Between IBF Financial and Grand Fortune

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

Diversification Opportunities for IBF Financial and Grand Fortune

0.29

Correlation Coefficient

IBF Financial  Grand Fortune

Modest diversification

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

Pair Corralation between IBF Financial and Grand Fortune

Assuming the 90 days trading horizon IBF Financial Holdings is expected to generate 1.01 times more return on investment than Grand Fortune. However, IBF Financial is 1.01 times more volatile than Grand Fortune Securities. It trades about 0.27 of its potential returns per unit of risk. Grand Fortune Securities is currently generating about -0.31 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	100.0%
Values	Daily Returns

IBF Financial Holdings  vs.  Grand Fortune Securities

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.

Grand Fortune Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind IBF Financial Holdings and Grand Fortune Securities 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.