Correlation Between Indiva and Rubicon Organics

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

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

Diversification Opportunities for Indiva and Rubicon Organics

0.0

Correlation Coefficient

Indiva  Rubicon Organics

Pay attention - limited upside

The 3 months correlation between Indiva and Rubicon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indiva and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics and Indiva 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 Indiva are associated (or correlated) with Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Indiva i.e., Indiva and Rubicon Organics go up and down completely randomly.

Pair Corralation between Indiva and Rubicon Organics

Assuming the 90 days horizon Indiva is expected to generate 3.73 times less return on investment than Rubicon Organics. In addition to that, Indiva is 1.08 times more volatile than Rubicon Organics. It trades about 0.01 of its total potential returns per unit of risk. Rubicon Organics is currently generating about 0.02 per unit of volatility. If you would invest  40.00  in Rubicon Organics on October 8, 2024 and sell it today you would lose (6.00) from holding Rubicon Organics or give up 15.0% of portfolio value over 90 days.

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

Indiva  vs.  Rubicon Organics

Indiva

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indiva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Indiva is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Rubicon Organics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Rubicon Organics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indiva and Rubicon Organics

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

The idea behind Indiva and Rubicon Organics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.