Correlation Between INDOSAT -B- and Goosehead Insurance

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

By analyzing existing cross correlation between INDOSAT B and Goosehead Insurance, you can compare the effects of market volatilities on INDOSAT -B- and Goosehead 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 INDOSAT -B- with a short position of Goosehead Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOSAT -B- and Goosehead Insurance.

Diversification Opportunities for INDOSAT -B- and Goosehead Insurance

-0.54

Correlation Coefficient

INDOSAT -B-  Goosehead Insurance

Excellent diversification

The 3 months correlation between INDOSAT and Goosehead is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding INDOSAT B and Goosehead Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goosehead Insurance and INDOSAT -B- 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 INDOSAT B are associated (or correlated) with Goosehead Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goosehead Insurance has no effect on the direction of INDOSAT -B- i.e., INDOSAT -B- and Goosehead Insurance go up and down completely randomly.

Pair Corralation between INDOSAT -B- and Goosehead Insurance

Assuming the 90 days trading horizon INDOSAT B is expected to under-perform the Goosehead Insurance. In addition to that, INDOSAT -B- is 2.08 times more volatile than Goosehead Insurance. It trades about -0.04 of its total potential returns per unit of risk. Goosehead Insurance is currently generating about 0.16 per unit of volatility. If you would invest  8,050  in Goosehead Insurance on October 8, 2024 and sell it today you would earn a total of  2,125  from holding Goosehead Insurance or generate 26.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

INDOSAT B   vs.  Goosehead Insurance

INDOSAT -B-

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDOSAT B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Goosehead Insurance

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Goosehead Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Goosehead Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INDOSAT -B- and Goosehead Insurance

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

The idea behind INDOSAT B and Goosehead 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..