Correlation Between Iveda Solutions and Barloworld

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

By analyzing existing cross correlation between Iveda Solutions Warrant and Barloworld Ltd ADR, you can compare the effects of market volatilities on Iveda Solutions and Barloworld 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 Iveda Solutions with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iveda Solutions and Barloworld.

Diversification Opportunities for Iveda Solutions and Barloworld

0.61

Correlation Coefficient

Iveda Solutions  Barloworld

Poor diversification

The 3 months correlation between Iveda and Barloworld is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Iveda Solutions Warrant and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Iveda Solutions 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 Iveda Solutions Warrant are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Iveda Solutions i.e., Iveda Solutions and Barloworld go up and down completely randomly.

Pair Corralation between Iveda Solutions and Barloworld

Assuming the 90 days horizon Iveda Solutions Warrant is expected to generate 5.66 times more return on investment than Barloworld. However, Iveda Solutions is 5.66 times more volatile than Barloworld Ltd ADR. It trades about 0.31 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.14 per unit of risk. If you would invest  3.00  in Iveda Solutions Warrant on October 7, 2024 and sell it today you would earn a total of  23.00  from holding Iveda Solutions Warrant or generate 766.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	53.97%
Values	Daily Returns

Iveda Solutions Warrant  vs.  Barloworld Ltd ADR

Iveda Solutions Warrant

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions Warrant are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Iveda Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Barloworld ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iveda Solutions and Barloworld

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

The idea behind Iveda Solutions Warrant and Barloworld Ltd ADR 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 Global Correlations module to find global opportunities by holding instruments from different markets.