Correlation Between ILFS Investment and Aban Offshore

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Can any of the company-specific risk be diversified away by investing in both ILFS Investment and Aban Offshore 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 ILFS Investment and Aban Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ILFS Investment Managers and Aban Offshore Limited, you can compare the effects of market volatilities on ILFS Investment and Aban Offshore 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 ILFS Investment with a short position of Aban Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of ILFS Investment and Aban Offshore.

Diversification Opportunities for ILFS Investment and Aban Offshore

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ILFS and Aban is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited and ILFS Investment 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 ILFS Investment Managers are associated (or correlated) with Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of ILFS Investment i.e., ILFS Investment and Aban Offshore go up and down completely randomly.

Pair Corralation between ILFS Investment and Aban Offshore

Assuming the 90 days trading horizon ILFS Investment Managers is expected to under-perform the Aban Offshore. But the stock apears to be less risky and, when comparing its historical volatility, ILFS Investment Managers is 1.0 times less risky than Aban Offshore. The stock trades about -0.01 of its potential returns per unit of risk. The Aban Offshore Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,726  in Aban Offshore Limited on October 8, 2024 and sell it today you would lose (327.00) from holding Aban Offshore Limited or give up 4.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ILFS Investment Managers  vs.  Aban Offshore Limited

 Performance 
       Timeline  
ILFS Investment Managers 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ILFS Investment Managers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ILFS Investment is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Aban Offshore Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aban Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aban Offshore is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ILFS Investment and Aban Offshore Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ILFS Investment and Aban Offshore

The main advantage of trading using opposite ILFS Investment and Aban Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ILFS Investment position performs unexpectedly, Aban Offshore 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 Aban Offshore will offset losses from the drop in Aban Offshore's long position.
The idea behind ILFS Investment Managers and Aban Offshore Limited 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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