Correlation Between Concord Securities and IBF Financial

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

By analyzing existing cross correlation between Concord Securities Co and IBF Financial Holdings, you can compare the effects of market volatilities on Concord Securities and IBF Financial 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 Concord Securities with a short position of IBF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Securities and IBF Financial.

Diversification Opportunities for Concord Securities and IBF Financial

0.03

Correlation Coefficient

Concord Securities  IBF Financial

Significant diversification

The 3 months correlation between Concord and IBF is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Concord Securities Co and IBF Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBF Financial Holdings and Concord Securities 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 Concord Securities Co are associated (or correlated) with IBF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBF Financial Holdings has no effect on the direction of Concord Securities i.e., Concord Securities and IBF Financial go up and down completely randomly.

Pair Corralation between Concord Securities and IBF Financial

Assuming the 90 days trading horizon Concord Securities Co is expected to generate 0.76 times more return on investment than IBF Financial. However, Concord Securities Co is 1.32 times less risky than IBF Financial. It trades about -0.03 of its potential returns per unit of risk. IBF Financial Holdings is currently generating about -0.08 per unit of risk. If you would invest  1,390  in Concord Securities Co on September 3, 2024 and sell it today you would lose (25.00) from holding Concord Securities Co or give up 1.8% of portfolio value over 90 days.

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

Concord Securities Co  vs.  IBF Financial Holdings

Concord Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Concord Securities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

IBF Financial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IBF Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IBF Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Concord Securities and IBF Financial

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

The idea behind Concord Securities Co and IBF Financial Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.