Correlation Between IDJ FINANCIAL and Cotec Construction

Can any of the company-specific risk be diversified away by investing in both IDJ FINANCIAL and Cotec Construction 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 IDJ FINANCIAL and Cotec Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for IDJ FINANCIAL and Cotec Construction

-0.06

Correlation Coefficient

IDJ FINANCIAL  Cotec Construction

Good diversification

The 3 months correlation between IDJ and Cotec is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding IDJ FINANCIAL and Cotec Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cotec Construction JSC and IDJ FINANCIAL 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 IDJ FINANCIAL are associated (or correlated) with Cotec Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cotec Construction JSC has no effect on the direction of IDJ FINANCIAL i.e., IDJ FINANCIAL and Cotec Construction go up and down completely randomly.

Pair Corralation between IDJ FINANCIAL and Cotec Construction

Assuming the 90 days trading horizon IDJ FINANCIAL is expected to under-perform the Cotec Construction. In addition to that, IDJ FINANCIAL is 1.48 times more volatile than Cotec Construction JSC. It trades about -0.01 of its total potential returns per unit of risk. Cotec Construction JSC is currently generating about 0.08 per unit of volatility. If you would invest  2,918,611  in Cotec Construction JSC on October 12, 2024 and sell it today you would earn a total of  3,981,389  from holding Cotec Construction JSC or generate 136.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

IDJ FINANCIAL  vs.  Cotec Construction JSC

IDJ FINANCIAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cotec Construction JSC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cotec Construction JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Cotec Construction may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IDJ FINANCIAL and Cotec Construction

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

The idea behind IDJ FINANCIAL and Cotec Construction 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.