Correlation Between Idico JSC and FIT INVEST

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

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

Diversification Opportunities for Idico JSC and FIT INVEST

0.28

Correlation Coefficient

Idico JSC  FIT INVEST

Modest diversification

The 3 months correlation between Idico and FIT is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Idico JSC and FIT INVEST JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT INVEST JSC and Idico JSC 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 Idico JSC are associated (or correlated) with FIT INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT INVEST JSC has no effect on the direction of Idico JSC i.e., Idico JSC and FIT INVEST go up and down completely randomly.

Pair Corralation between Idico JSC and FIT INVEST

Assuming the 90 days trading horizon Idico JSC is expected to under-perform the FIT INVEST. But the stock apears to be less risky and, when comparing its historical volatility, Idico JSC is 1.02 times less risky than FIT INVEST. The stock trades about -0.27 of its potential returns per unit of risk. The FIT INVEST JSC is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  421,000  in FIT INVEST JSC on October 9, 2024 and sell it today you would lose (7,000) from holding FIT INVEST JSC or give up 1.66% of portfolio value over 90 days.

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

Idico JSC  vs.  FIT INVEST JSC

Idico JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idico JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Idico JSC is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

FIT INVEST JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIT INVEST JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FIT INVEST is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Idico JSC and FIT INVEST

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

The idea behind Idico JSC and FIT INVEST JSC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.