Correlation Between Insas Bhd and Eco World

Can any of the company-specific risk be diversified away by investing in both Insas Bhd and Eco World 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 Insas Bhd and Eco World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Insas Bhd and Eco World Develop, you can compare the effects of market volatilities on Insas Bhd and Eco World 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 Insas Bhd with a short position of Eco World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insas Bhd and Eco World.

Diversification Opportunities for Insas Bhd and Eco World

-0.22

Correlation Coefficient

Insas Bhd  Eco World

Very good diversification

The 3 months correlation between Insas and Eco is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Insas Bhd and Eco World Develop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco World Develop and Insas Bhd 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 Insas Bhd are associated (or correlated) with Eco World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco World Develop has no effect on the direction of Insas Bhd i.e., Insas Bhd and Eco World go up and down completely randomly.

Pair Corralation between Insas Bhd and Eco World

Assuming the 90 days trading horizon Insas Bhd is expected to under-perform the Eco World. But the stock apears to be less risky and, when comparing its historical volatility, Insas Bhd is 1.9 times less risky than Eco World. The stock trades about -0.08 of its potential returns per unit of risk. The Eco World Develop is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Eco World Develop on September 3, 2024 and sell it today you would earn a total of  33.00  from holding Eco World Develop or generate 21.15% return on investment over 90 days.

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

Insas Bhd  vs.  Eco World Develop

Insas Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insas Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Eco World Develop

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eco World Develop are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Eco World disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Insas Bhd and Eco World

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

The idea behind Insas Bhd and Eco World Develop 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.