Correlation Between IBL HealthCare and 786 Investment

Can any of the company-specific risk be diversified away by investing in both IBL HealthCare and 786 Investment 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 IBL HealthCare and 786 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IBL HealthCare and 786 Investment Limited, you can compare the effects of market volatilities on IBL HealthCare and 786 Investment 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 IBL HealthCare with a short position of 786 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and 786 Investment.

Diversification Opportunities for IBL HealthCare and 786 Investment

-0.25

Correlation Coefficient

IBL HealthCare  786 Investment

Very good diversification

The 3 months correlation between IBL and 786 is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and 786 Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 786 Investment and IBL HealthCare 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 IBL HealthCare are associated (or correlated) with 786 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 786 Investment has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and 786 Investment go up and down completely randomly.

Pair Corralation between IBL HealthCare and 786 Investment

Assuming the 90 days trading horizon IBL HealthCare is expected to under-perform the 786 Investment. But the stock apears to be less risky and, when comparing its historical volatility, IBL HealthCare is 1.39 times less risky than 786 Investment. The stock trades about -0.08 of its potential returns per unit of risk. The 786 Investment Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  717.00  in 786 Investment Limited on December 4, 2024 and sell it today you would earn a total of  182.00  from holding 786 Investment Limited or generate 25.38% return on investment over 90 days.

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

IBL HealthCare  vs.  786 Investment Limited

IBL HealthCare

Risk-Adjusted Performance

Very Weak

Over the last 90 days IBL HealthCare 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 essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

786 Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 786 Investment Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, 786 Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IBL HealthCare and 786 Investment

The main advantage of trading using opposite IBL HealthCare and 786 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare position performs unexpectedly, 786 Investment 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 786 Investment will offset losses from the drop in 786 Investment's long position.

The idea behind IBL HealthCare and 786 Investment Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.