Correlation Between Near and IBC Advanced

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

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

Diversification Opportunities for Near and IBC Advanced

0.83

Correlation Coefficient

Near  IBC Advanced

Very poor diversification

The 3 months correlation between Near and IBC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Near and IBC Advanced Alloys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBC Advanced Alloys and Near 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 Near are associated (or correlated) with IBC Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBC Advanced Alloys has no effect on the direction of Near i.e., Near and IBC Advanced go up and down completely randomly.

Pair Corralation between Near and IBC Advanced

Assuming the 90 days trading horizon Near is expected to generate 0.93 times more return on investment than IBC Advanced. However, Near is 1.08 times less risky than IBC Advanced. It trades about 0.11 of its potential returns per unit of risk. IBC Advanced Alloys is currently generating about 0.08 per unit of risk. If you would invest  377.00  in Near on January 31, 2024 and sell it today you would earn a total of  248.00  from holding Near or generate 65.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.65%
Values	Daily Returns

Near  vs.  IBC Advanced Alloys

Near

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Near are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Near exhibited solid returns over the last few months and may actually be approaching a breakup point.

IBC Advanced Alloys

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IBC Advanced Alloys are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, IBC Advanced showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Near and IBC Advanced

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

The idea behind Near and IBC Advanced Alloys 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.