Correlation Between Indara Insurance and Inter Pharma

Can any of the company-specific risk be diversified away by investing in both Indara Insurance and Inter Pharma 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 Inter Pharma 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 Inter Pharma Public, you can compare the effects of market volatilities on Indara Insurance and Inter Pharma 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 Inter Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indara Insurance and Inter Pharma.

Diversification Opportunities for Indara Insurance and Inter Pharma

0.08

Correlation Coefficient

Indara Insurance  Inter Pharma

Significant diversification

The 3 months correlation between Indara and Inter is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Indara Insurance Public and Inter Pharma Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Pharma 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 Inter Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Pharma Public has no effect on the direction of Indara Insurance i.e., Indara Insurance and Inter Pharma go up and down completely randomly.

Pair Corralation between Indara Insurance and Inter Pharma

Assuming the 90 days trading horizon Indara Insurance Public is expected to generate 0.53 times more return on investment than Inter Pharma. However, Indara Insurance Public is 1.88 times less risky than Inter Pharma. It trades about 0.13 of its potential returns per unit of risk. Inter Pharma Public is currently generating about 0.06 per unit of risk. If you would invest  7,575  in Indara Insurance Public on December 23, 2024 and sell it today you would earn a total of  1,825  from holding Indara Insurance Public or generate 24.09% return on investment over 90 days.

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

Indara Insurance Public  vs.  Inter Pharma Public

Indara Insurance Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indara Insurance Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Indara Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Inter Pharma Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Pharma Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Inter Pharma disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indara Insurance and Inter Pharma

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

The idea behind Indara Insurance Public and Inter Pharma 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.