Correlation Between Imaflex and Fab Form

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

By analyzing existing cross correlation between Imaflex and Fab Form Industries, you can compare the effects of market volatilities on Imaflex and Fab Form 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 Imaflex with a short position of Fab Form. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imaflex and Fab Form.

Diversification Opportunities for Imaflex and Fab Form

0.83

Correlation Coefficient

Imaflex  Fab Form

Very poor diversification

The 3 months correlation between Imaflex and Fab is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Imaflex and Fab Form Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fab Form Industries and Imaflex 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 Imaflex are associated (or correlated) with Fab Form. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fab Form Industries has no effect on the direction of Imaflex i.e., Imaflex and Fab Form go up and down completely randomly.

Pair Corralation between Imaflex and Fab Form

Assuming the 90 days horizon Imaflex is expected to generate 1.08 times more return on investment than Fab Form. However, Imaflex is 1.08 times more volatile than Fab Form Industries. It trades about -0.06 of its potential returns per unit of risk. Fab Form Industries is currently generating about -0.11 per unit of risk. If you would invest  141.00  in Imaflex on December 28, 2024 and sell it today you would lose (17.00) from holding Imaflex or give up 12.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Imaflex  vs.  Fab Form Industries

Imaflex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imaflex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Fab Form Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fab Form Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Imaflex and Fab Form

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

The idea behind Imaflex and Fab Form Industries 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.