Correlation Between II Group and E For

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

By analyzing existing cross correlation between II Group Public and E for L, you can compare the effects of market volatilities on II Group and E For 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 II Group with a short position of E For. Check out your portfolio center. Please also check ongoing floating volatility patterns of II Group and E For.

Diversification Opportunities for II Group and E For

0.73

Correlation Coefficient

II Group  E For

Poor diversification

The 3 months correlation between IIG and EFORL is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding II Group Public and E for L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E for L and II Group 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 II Group Public are associated (or correlated) with E For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E for L has no effect on the direction of II Group i.e., II Group and E For go up and down completely randomly.

Pair Corralation between II Group and E For

Assuming the 90 days trading horizon II Group Public is expected to generate 0.6 times more return on investment than E For. However, II Group Public is 1.65 times less risky than E For. It trades about -0.16 of its potential returns per unit of risk. E for L is currently generating about -0.19 per unit of risk. If you would invest  394.00  in II Group Public on December 29, 2024 and sell it today you would lose (92.00) from holding II Group Public or give up 23.35% of portfolio value over 90 days.

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

II Group Public  vs.  E for L

II Group Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days II Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

E for L

Risk-Adjusted Performance

Very Weak

Over the last 90 days E for L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with II Group and E For

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

The idea behind II Group Public and E for L 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 Transaction History module to view history of all your transactions and understand their impact on performance.