Correlation Between Superior Plus and Ibiden CoLtd

Can any of the company-specific risk be diversified away by investing in both Superior Plus and Ibiden CoLtd 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 Superior Plus and Ibiden CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and Ibiden CoLtd, you can compare the effects of market volatilities on Superior Plus and Ibiden CoLtd 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 Superior Plus with a short position of Ibiden CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Ibiden CoLtd.

Diversification Opportunities for Superior Plus and Ibiden CoLtd

-0.03

Correlation Coefficient

Superior Plus  Ibiden CoLtd

Good diversification

The 3 months correlation between Superior and Ibiden is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Ibiden CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibiden CoLtd and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Ibiden CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibiden CoLtd has no effect on the direction of Superior Plus i.e., Superior Plus and Ibiden CoLtd go up and down completely randomly.

Pair Corralation between Superior Plus and Ibiden CoLtd

Assuming the 90 days horizon Superior Plus Corp is expected to generate 1.63 times more return on investment than Ibiden CoLtd. However, Superior Plus is 1.63 times more volatile than Ibiden CoLtd. It trades about 0.01 of its potential returns per unit of risk. Ibiden CoLtd is currently generating about -0.03 per unit of risk. If you would invest  423.00  in Superior Plus Corp on October 6, 2024 and sell it today you would lose (7.00) from holding Superior Plus Corp or give up 1.65% of portfolio value over 90 days.

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

Superior Plus Corp  vs.  Ibiden CoLtd

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ibiden CoLtd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ibiden CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ibiden CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Superior Plus and Ibiden CoLtd

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

The idea behind Superior Plus Corp and Ibiden CoLtd 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.