Correlation Between Indorama Ventures and IRPC Public

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

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

Diversification Opportunities for Indorama Ventures and IRPC Public

0.06

Correlation Coefficient

Indorama Ventures  IRPC Public

Significant diversification

The 3 months correlation between Indorama and IRPC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Ventures PCL and IRPC Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRPC Public and Indorama Ventures 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 Indorama Ventures PCL are associated (or correlated) with IRPC Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRPC Public has no effect on the direction of Indorama Ventures i.e., Indorama Ventures and IRPC Public go up and down completely randomly.

Pair Corralation between Indorama Ventures and IRPC Public

Assuming the 90 days trading horizon Indorama Ventures PCL is expected to generate 1.25 times more return on investment than IRPC Public. However, Indorama Ventures is 1.25 times more volatile than IRPC Public. It trades about -0.08 of its potential returns per unit of risk. IRPC Public is currently generating about -0.23 per unit of risk. If you would invest  2,558  in Indorama Ventures PCL on September 5, 2024 and sell it today you would lose (98.00) from holding Indorama Ventures PCL or give up 3.83% of portfolio value over 90 days.

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

Indorama Ventures PCL  vs.  IRPC Public

Indorama Ventures PCL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indorama Ventures PCL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Indorama Ventures disclosed solid returns over the last few months and may actually be approaching a breakup point.

IRPC Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IRPC Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals 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 Indorama Ventures and IRPC Public

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

The idea behind Indorama Ventures PCL and IRPC 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.