Correlation Between Barloworld and Il2m International

Can any of the company-specific risk be diversified away by investing in both Barloworld and Il2m International 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 Barloworld and Il2m International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barloworld Ltd ADR and Il2m International Corp, you can compare the effects of market volatilities on Barloworld and Il2m International 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 Barloworld with a short position of Il2m International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Il2m International.

Diversification Opportunities for Barloworld and Il2m International

0.18

Correlation Coefficient

Barloworld  Il2m International

Average diversification

The 3 months correlation between Barloworld and Il2m is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Il2m International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Il2m International Corp and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Il2m International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Il2m International Corp has no effect on the direction of Barloworld i.e., Barloworld and Il2m International go up and down completely randomly.

Pair Corralation between Barloworld and Il2m International

If you would invest (100.00) in Il2m International Corp on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Il2m International Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Il2m International Corp

Barloworld ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Il2m International Corp

Risk-Adjusted Performance

Insignificant

Over the last 90 days Il2m International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak forward indicators, Il2m International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barloworld and Il2m International

The main advantage of trading using opposite Barloworld and Il2m International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Il2m International 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 Il2m International will offset losses from the drop in Il2m International's long position.

The idea behind Barloworld Ltd ADR and Il2m International Corp 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.