Correlation Between Ibstock PLC and Amaroq Minerals

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

By analyzing existing cross correlation between Ibstock PLC and Amaroq Minerals, you can compare the effects of market volatilities on Ibstock PLC and Amaroq Minerals 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 Ibstock PLC with a short position of Amaroq Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ibstock PLC and Amaroq Minerals.

Diversification Opportunities for Ibstock PLC and Amaroq Minerals

-0.63

Correlation Coefficient

Ibstock PLC  Amaroq Minerals

Excellent diversification

The 3 months correlation between Ibstock and Amaroq is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ibstock PLC and Amaroq Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaroq Minerals and Ibstock PLC 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 Ibstock PLC are associated (or correlated) with Amaroq Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaroq Minerals has no effect on the direction of Ibstock PLC i.e., Ibstock PLC and Amaroq Minerals go up and down completely randomly.

Pair Corralation between Ibstock PLC and Amaroq Minerals

Assuming the 90 days trading horizon Ibstock PLC is expected to generate 1.62 times less return on investment than Amaroq Minerals. But when comparing it to its historical volatility, Ibstock PLC is 1.1 times less risky than Amaroq Minerals. It trades about 0.07 of its potential returns per unit of risk. Amaroq Minerals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,950  in Amaroq Minerals on October 8, 2024 and sell it today you would earn a total of  4,265  from holding Amaroq Minerals or generate 71.68% return on investment over 90 days.

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

Ibstock PLC  vs.  Amaroq Minerals

Ibstock PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibstock PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ibstock PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Amaroq Minerals

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amaroq Minerals are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Amaroq Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ibstock PLC and Amaroq Minerals

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

The idea behind Ibstock PLC and Amaroq Minerals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.