Correlation Between IDI SCA and Graines Voltz

Can any of the company-specific risk be diversified away by investing in both IDI SCA and Graines Voltz 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 IDI SCA and Graines Voltz into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IDI SCA and Graines Voltz SA, you can compare the effects of market volatilities on IDI SCA and Graines Voltz 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 IDI SCA with a short position of Graines Voltz. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDI SCA and Graines Voltz.

Diversification Opportunities for IDI SCA and Graines Voltz

-0.46

Correlation Coefficient

IDI SCA  Graines Voltz

Very good diversification

The 3 months correlation between IDI and Graines is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding IDI SCA and Graines Voltz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graines Voltz SA and IDI SCA 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 IDI SCA are associated (or correlated) with Graines Voltz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graines Voltz SA has no effect on the direction of IDI SCA i.e., IDI SCA and Graines Voltz go up and down completely randomly.

Pair Corralation between IDI SCA and Graines Voltz

Assuming the 90 days trading horizon IDI SCA is expected to generate 1.18 times less return on investment than Graines Voltz. But when comparing it to its historical volatility, IDI SCA is 2.74 times less risky than Graines Voltz. It trades about 0.32 of its potential returns per unit of risk. Graines Voltz SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,805  in Graines Voltz SA on December 1, 2024 and sell it today you would earn a total of  130.00  from holding Graines Voltz SA or generate 7.2% return on investment over 90 days.

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

IDI SCA  vs.  Graines Voltz SA

IDI SCA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IDI SCA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IDI SCA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Graines Voltz SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IDI SCA and Graines Voltz

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

The idea behind IDI SCA and Graines Voltz SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.