Correlation Between Indara Insurance and IFS Capital

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

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

Diversification Opportunities for Indara Insurance and IFS Capital

0.62

Correlation Coefficient

Indara Insurance  IFS Capital

Poor diversification

The 3 months correlation between Indara and IFS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Indara Insurance Public and IFS Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IFS Capital Public and Indara Insurance 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 Indara Insurance Public are associated (or correlated) with IFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IFS Capital Public has no effect on the direction of Indara Insurance i.e., Indara Insurance and IFS Capital go up and down completely randomly.

Pair Corralation between Indara Insurance and IFS Capital

Assuming the 90 days trading horizon Indara Insurance Public is expected to generate 0.99 times more return on investment than IFS Capital. However, Indara Insurance Public is 1.01 times less risky than IFS Capital. It trades about 0.08 of its potential returns per unit of risk. IFS Capital Public is currently generating about -0.12 per unit of risk. If you would invest  7,575  in Indara Insurance Public on October 20, 2024 and sell it today you would earn a total of  175.00  from holding Indara Insurance Public or generate 2.31% return on investment over 90 days.

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

Indara Insurance Public  vs.  IFS Capital Public

Indara Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indara Insurance 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

IFS Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IFS Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Indara Insurance and IFS Capital

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

The idea behind Indara Insurance Public and IFS Capital Public 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.