Correlation Between Indo Borax and PB Fintech

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

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

Diversification Opportunities for Indo Borax and PB Fintech

0.46

Correlation Coefficient

Indo Borax  PB Fintech

Very weak diversification

The 3 months correlation between Indo and POLICYBZR is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Indo Borax Chemicals and PB Fintech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PB Fintech Limited and Indo Borax 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 Indo Borax Chemicals are associated (or correlated) with PB Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PB Fintech Limited has no effect on the direction of Indo Borax i.e., Indo Borax and PB Fintech go up and down completely randomly.

Pair Corralation between Indo Borax and PB Fintech

Assuming the 90 days trading horizon Indo Borax Chemicals is expected to under-perform the PB Fintech. In addition to that, Indo Borax is 1.63 times more volatile than PB Fintech Limited. It trades about -0.02 of its total potential returns per unit of risk. PB Fintech Limited is currently generating about 0.08 per unit of volatility. If you would invest  171,875  in PB Fintech Limited on September 3, 2024 and sell it today you would earn a total of  17,515  from holding PB Fintech Limited or generate 10.19% return on investment over 90 days.

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

Indo Borax Chemicals  vs.  PB Fintech Limited

Indo Borax Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Borax Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Indo Borax is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

PB Fintech Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PB Fintech Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, PB Fintech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Indo Borax and PB Fintech

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

The idea behind Indo Borax Chemicals and PB Fintech Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.