Correlation Between IBF Financial and Onyx Healthcare

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

Diversification Opportunities for IBF Financial and Onyx Healthcare

-0.09

Correlation Coefficient

IBF Financial  Onyx Healthcare

Good diversification

The 3 months correlation between IBF and Onyx is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding IBF Financial Holdings and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare 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 Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of IBF Financial i.e., IBF Financial and Onyx Healthcare go up and down completely randomly.

Pair Corralation between IBF Financial and Onyx Healthcare

Assuming the 90 days trading horizon IBF Financial Holdings is expected to under-perform the Onyx Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, IBF Financial Holdings is 1.73 times less risky than Onyx Healthcare. The stock trades about -0.18 of its potential returns per unit of risk. The Onyx Healthcare is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,700  in Onyx Healthcare on October 26, 2024 and sell it today you would earn a total of  600.00  from holding Onyx Healthcare or generate 3.82% return on investment over 90 days.

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

IBF Financial Holdings  vs.  Onyx Healthcare

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.

Onyx Healthcare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Onyx Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Onyx Healthcare 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 Onyx Healthcare

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

The idea behind IBF Financial Holdings and Onyx Healthcare 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.