Correlation Between IBL HealthCare and Wah Nobel

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

By analyzing existing cross correlation between IBL HealthCare and Wah Nobel Chemicals, you can compare the effects of market volatilities on IBL HealthCare and Wah Nobel 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 Wah Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and Wah Nobel.

Diversification Opportunities for IBL HealthCare and Wah Nobel

0.15

Correlation Coefficient

IBL HealthCare  Wah Nobel

Average diversification

The 3 months correlation between IBL and Wah is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and Wah Nobel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Nobel Chemicals 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 Wah Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Nobel Chemicals has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and Wah Nobel go up and down completely randomly.

Pair Corralation between IBL HealthCare and Wah Nobel

Assuming the 90 days trading horizon IBL HealthCare is expected to under-perform the Wah Nobel. But the stock apears to be less risky and, when comparing its historical volatility, IBL HealthCare is 1.25 times less risky than Wah Nobel. The stock trades about -0.39 of its potential returns per unit of risk. The Wah Nobel Chemicals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  23,008  in Wah Nobel Chemicals on December 4, 2024 and sell it today you would lose (257.00) from holding Wah Nobel Chemicals or give up 1.12% of portfolio value over 90 days.

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

IBL HealthCare  vs.  Wah Nobel Chemicals

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.

Wah Nobel Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wah Nobel Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wah Nobel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IBL HealthCare and Wah Nobel

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

The idea behind IBL HealthCare and Wah Nobel Chemicals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.