Correlation Between Imaflex and ADF

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

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

Diversification Opportunities for Imaflex and ADF

-0.12

Correlation Coefficient

Imaflex  ADF

Good diversification

The 3 months correlation between Imaflex and ADF is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Imaflex and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group and Imaflex 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 Imaflex are associated (or correlated) with ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of Imaflex i.e., Imaflex and ADF go up and down completely randomly.

Pair Corralation between Imaflex and ADF

Assuming the 90 days horizon Imaflex is expected to under-perform the ADF. But the stock apears to be less risky and, when comparing its historical volatility, Imaflex is 1.83 times less risky than ADF. The stock trades about -0.07 of its potential returns per unit of risk. The ADF Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  813.00  in ADF Group on July 1, 2025 and sell it today you would lose (27.00) from holding ADF Group or give up 3.32% of portfolio value over 90 days.

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

Imaflex  vs.  ADF Group

Imaflex

Risk-Adjusted Performance

Weakest

Over the last 90 days Imaflex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

ADF Group

Risk-Adjusted Performance

Weak

Over the last 90 days ADF Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ADF is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Imaflex and ADF

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

The idea behind Imaflex and ADF Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.