Correlation Between IdeaForge Technology and General Insurance

Can any of the company-specific risk be diversified away by investing in both IdeaForge Technology and General Insurance 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 IdeaForge Technology and General Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ideaForge Technology Limited and General Insurance, you can compare the effects of market volatilities on IdeaForge Technology and General Insurance 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 IdeaForge Technology with a short position of General Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of IdeaForge Technology and General Insurance.

Diversification Opportunities for IdeaForge Technology and General Insurance

-0.04

Correlation Coefficient

IdeaForge Technology  General Insurance

Good diversification

The 3 months correlation between IdeaForge and General is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ideaForge Technology Limited and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance and IdeaForge Technology 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 ideaForge Technology Limited are associated (or correlated) with General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of IdeaForge Technology i.e., IdeaForge Technology and General Insurance go up and down completely randomly.

Pair Corralation between IdeaForge Technology and General Insurance

Assuming the 90 days trading horizon ideaForge Technology Limited is expected to under-perform the General Insurance. But the stock apears to be less risky and, when comparing its historical volatility, ideaForge Technology Limited is 1.25 times less risky than General Insurance. The stock trades about -0.07 of its potential returns per unit of risk. The General Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  17,739  in General Insurance on October 3, 2024 and sell it today you would earn a total of  26,686  from holding General Insurance or generate 150.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.72%
Values	Daily Returns

ideaForge Technology Limited  vs.  General Insurance

ideaForge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ideaForge Technology Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

General Insurance

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with IdeaForge Technology and General Insurance

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

The idea behind ideaForge Technology Limited and General Insurance 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.