Correlation Between IBF Financial and Planet Technology

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

Diversification Opportunities for IBF Financial and Planet Technology

-0.49

Correlation Coefficient

IBF Financial  Planet Technology

Very good diversification

The 3 months correlation between IBF and Planet is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding IBF Financial Holdings and Planet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Technology 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 Planet Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Technology has no effect on the direction of IBF Financial i.e., IBF Financial and Planet Technology go up and down completely randomly.

Pair Corralation between IBF Financial and Planet Technology

Assuming the 90 days trading horizon IBF Financial Holdings is expected to under-perform the Planet Technology. But the stock apears to be less risky and, when comparing its historical volatility, IBF Financial Holdings is 1.17 times less risky than Planet Technology. The stock trades about -0.31 of its potential returns per unit of risk. The Planet Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  15,000  in Planet Technology on December 29, 2024 and sell it today you would earn a total of  450.00  from holding Planet Technology or generate 3.0% return on investment over 90 days.

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

IBF Financial Holdings  vs.  Planet Technology

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.

Planet Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Planet Technology 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 Planet Technology

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

The idea behind IBF Financial Holdings and Planet Technology 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.