Correlation Between Arad Investment and IBI Mutual

Can any of the company-specific risk be diversified away by investing in both Arad Investment and IBI Mutual 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 Arad Investment and IBI Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arad Investment Industrial and IBI Mutual Funds, you can compare the effects of market volatilities on Arad Investment and IBI Mutual 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 Arad Investment with a short position of IBI Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and IBI Mutual.

Diversification Opportunities for Arad Investment and IBI Mutual

0.34

Correlation Coefficient

Arad Investment  IBI Mutual

Weak diversification

The 3 months correlation between Arad and IBI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and IBI Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBI Mutual Funds and Arad Investment 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 Arad Investment Industrial are associated (or correlated) with IBI Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBI Mutual Funds has no effect on the direction of Arad Investment i.e., Arad Investment and IBI Mutual go up and down completely randomly.

Pair Corralation between Arad Investment and IBI Mutual

Assuming the 90 days trading horizon Arad Investment Industrial is expected to generate 1.5 times more return on investment than IBI Mutual. However, Arad Investment is 1.5 times more volatile than IBI Mutual Funds. It trades about 0.4 of its potential returns per unit of risk. IBI Mutual Funds is currently generating about -0.05 per unit of risk. If you would invest  902,000  in Arad Investment Industrial on October 10, 2024 and sell it today you would earn a total of  695,000  from holding Arad Investment Industrial or generate 77.05% return on investment over 90 days.

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

Arad Investment Industrial  vs.  IBI Mutual Funds

Arad Investment Indu

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Arad Investment Industrial are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Arad Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

IBI Mutual Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IBI Mutual Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Arad Investment and IBI Mutual

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

The idea behind Arad Investment Industrial and IBI Mutual Funds 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.