Correlation Between Armada Hflr and IFS Capital

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and IFS Capital 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 Armada Hflr and IFS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and IFS Capital Public, you can compare the effects of market volatilities on Armada Hflr and IFS Capital 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 Armada Hflr with a short position of IFS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and IFS Capital.

Diversification Opportunities for Armada Hflr and IFS Capital

-0.45

Correlation Coefficient

Armada Hflr  IFS Capital

Very good diversification

The 3 months correlation between Armada and IFS is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and IFS Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IFS Capital Public and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with IFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IFS Capital Public has no effect on the direction of Armada Hflr i.e., Armada Hflr and IFS Capital go up and down completely randomly.

Pair Corralation between Armada Hflr and IFS Capital

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the IFS Capital. In addition to that, Armada Hflr is 1.2 times more volatile than IFS Capital Public. It trades about -0.19 of its total potential returns per unit of risk. IFS Capital Public is currently generating about 0.05 per unit of volatility. If you would invest  225.00  in IFS Capital Public on December 25, 2024 and sell it today you would earn a total of  9.00  from holding IFS Capital Public or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Armada Hflr Pr  vs.  IFS Capital Public

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

IFS Capital Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IFS Capital Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, IFS Capital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Armada Hflr and IFS Capital

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

The idea behind Armada Hflr Pr and IFS Capital 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.