Correlation Between ID Logistics and Idsud SA

Can any of the company-specific risk be diversified away by investing in both ID Logistics and Idsud SA 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 ID Logistics and Idsud SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ID Logistics and Idsud SA

-0.01

Correlation Coefficient

ID Logistics  Idsud SA

Good diversification

The 3 months correlation between IDL and Idsud is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding ID Logistics Group and Idsud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idsud SA and ID Logistics 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 ID Logistics Group are associated (or correlated) with Idsud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idsud SA has no effect on the direction of ID Logistics i.e., ID Logistics and Idsud SA go up and down completely randomly.

Pair Corralation between ID Logistics and Idsud SA

Assuming the 90 days trading horizon ID Logistics is expected to generate 1.78 times less return on investment than Idsud SA. But when comparing it to its historical volatility, ID Logistics Group is 3.03 times less risky than Idsud SA. It trades about 0.05 of its potential returns per unit of risk. Idsud SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15,100  in Idsud SA on September 4, 2024 and sell it today you would earn a total of  3,940  from holding Idsud SA or generate 26.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.85%
Values	Daily Returns

ID Logistics Group  vs.  Idsud SA

ID Logistics Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Idsud SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Idsud SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Idsud SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ID Logistics and Idsud SA

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

The idea behind ID Logistics Group and Idsud 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.