Correlation Between International Business and Tarku Resources

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

By analyzing existing cross correlation between International Business Machines and Tarku Resources, you can compare the effects of market volatilities on International Business and Tarku Resources 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 International Business with a short position of Tarku Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Tarku Resources.

Diversification Opportunities for International Business and Tarku Resources

-0.43

Correlation Coefficient

International Business  Tarku Resources

Very good diversification

The 3 months correlation between International and Tarku is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Tarku Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarku Resources and International Business 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 International Business Machines are associated (or correlated) with Tarku Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarku Resources has no effect on the direction of International Business i.e., International Business and Tarku Resources go up and down completely randomly.

Pair Corralation between International Business and Tarku Resources

Considering the 90-day investment horizon International Business Machines is expected to generate 0.51 times more return on investment than Tarku Resources. However, International Business Machines is 1.96 times less risky than Tarku Resources. It trades about 0.1 of its potential returns per unit of risk. Tarku Resources is currently generating about 0.01 per unit of risk. If you would invest  21,879  in International Business Machines on December 28, 2024 and sell it today you would earn a total of  2,742  from holding International Business Machines or generate 12.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

International Business Machine  vs.  Tarku Resources

International Business

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Tarku Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tarku Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tarku Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Business and Tarku Resources

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

The idea behind International Business Machines and Tarku Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.