Correlation Between 2S Metal and Indara Insurance

Can any of the company-specific risk be diversified away by investing in both 2S Metal and Indara Insurance 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 2S Metal and Indara Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 2S Metal Public and Indara Insurance Public, you can compare the effects of market volatilities on 2S Metal and Indara Insurance 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 2S Metal with a short position of Indara Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2S Metal and Indara Insurance.

Diversification Opportunities for 2S Metal and Indara Insurance

0.86

Correlation Coefficient

2S Metal  Indara Insurance

Very poor diversification

The 3 months correlation between 2S Metal and Indara is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding 2S Metal Public and Indara Insurance Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indara Insurance Public and 2S Metal 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 2S Metal Public are associated (or correlated) with Indara Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indara Insurance Public has no effect on the direction of 2S Metal i.e., 2S Metal and Indara Insurance go up and down completely randomly.

Pair Corralation between 2S Metal and Indara Insurance

Assuming the 90 days horizon 2S Metal Public is expected to generate 0.42 times more return on investment than Indara Insurance. However, 2S Metal Public is 2.36 times less risky than Indara Insurance. It trades about -0.18 of its potential returns per unit of risk. Indara Insurance Public is currently generating about -0.08 per unit of risk. If you would invest  302.00  in 2S Metal Public on October 11, 2024 and sell it today you would lose (36.00) from holding 2S Metal Public or give up 11.92% of portfolio value over 90 days.

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

2S Metal Public  vs.  Indara Insurance Public

2S Metal Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 2S Metal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Indara Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indara Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with 2S Metal and Indara Insurance

The main advantage of trading using opposite 2S Metal and Indara Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2S Metal position performs unexpectedly, Indara Insurance 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 Indara Insurance will offset losses from the drop in Indara Insurance's long position.

The idea behind 2S Metal Public and Indara Insurance Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.