Correlation Between Mizuho Financial and INDIKA ENERGY

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

By analyzing existing cross correlation between Mizuho Financial Group and INDIKA ENERGY, you can compare the effects of market volatilities on Mizuho Financial and INDIKA ENERGY 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 Mizuho Financial with a short position of INDIKA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizuho Financial and INDIKA ENERGY.

Diversification Opportunities for Mizuho Financial and INDIKA ENERGY

-0.46

Correlation Coefficient

Mizuho Financial  INDIKA ENERGY

Very good diversification

The 3 months correlation between Mizuho and INDIKA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mizuho Financial Group and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY and Mizuho Financial 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 Mizuho Financial Group are associated (or correlated) with INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of Mizuho Financial i.e., Mizuho Financial and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between Mizuho Financial and INDIKA ENERGY

Assuming the 90 days trading horizon Mizuho Financial Group is expected to generate 0.42 times more return on investment than INDIKA ENERGY. However, Mizuho Financial Group is 2.36 times less risky than INDIKA ENERGY. It trades about 0.07 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about 0.01 per unit of risk. If you would invest  263.00  in Mizuho Financial Group on October 21, 2024 and sell it today you would earn a total of  215.00  from holding Mizuho Financial Group or generate 81.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mizuho Financial Group  vs.  INDIKA ENERGY

Mizuho Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mizuho Financial reported solid returns over the last few months and may actually be approaching a breakup point.

INDIKA ENERGY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INDIKA ENERGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, INDIKA ENERGY is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mizuho Financial and INDIKA ENERGY

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

The idea behind Mizuho Financial Group and INDIKA ENERGY 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.