Correlation Between IBF Financial and Great China

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

Diversification Opportunities for IBF Financial and Great China

-0.09

Correlation Coefficient

IBF Financial  Great China

Good diversification

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

Pair Corralation between IBF Financial and Great China

Assuming the 90 days trading horizon IBF Financial Holdings is expected to generate 2.74 times more return on investment than Great China. However, IBF Financial is 2.74 times more volatile than Great China Metal. It trades about 0.26 of its potential returns per unit of risk. Great China Metal is currently generating about 0.04 per unit of risk. If you would invest  1,450  in IBF Financial Holdings on September 17, 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 Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

IBF Financial Holdings  vs.  Great China Metal

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.

Great China Metal

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind IBF Financial Holdings and Great China Metal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.