Correlation Between Indexco Limited and Bid

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

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

Diversification Opportunities for Indexco Limited and Bid

-0.18

Correlation Coefficient

Indexco Limited  Bid

Good diversification

The 3 months correlation between Indexco and Bid is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Indexco Limited and Bid Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bid Corporation and Indexco Limited 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 Indexco Limited are associated (or correlated) with Bid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bid Corporation has no effect on the direction of Indexco Limited i.e., Indexco Limited and Bid go up and down completely randomly.

Pair Corralation between Indexco Limited and Bid

Assuming the 90 days trading horizon Indexco Limited is expected to generate 2.46 times less return on investment than Bid. But when comparing it to its historical volatility, Indexco Limited is 1.58 times less risky than Bid. It trades about 0.02 of its potential returns per unit of risk. Bid Corporation is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,877,659  in Bid Corporation on October 24, 2024 and sell it today you would earn a total of  706,441  from holding Bid Corporation or generate 18.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Indexco Limited   vs.  Bid Corp.

Indexco Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indexco Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Indexco Limited is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bid Corporation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bid Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bid may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Indexco Limited and Bid

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

The idea behind Indexco Limited and Bid Corporation 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.