Correlation Between Indo Borax and State Trading

Can any of the company-specific risk be diversified away by investing in both Indo Borax and State Trading 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 State Trading 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 The State Trading, you can compare the effects of market volatilities on Indo Borax and State Trading 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 State Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Borax and State Trading.

Diversification Opportunities for Indo Borax and State Trading

0.84

Correlation Coefficient

Indo Borax  State Trading

Very poor diversification

The 3 months correlation between Indo and State is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Indo Borax Chemicals and The State Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Trading 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 State Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Trading has no effect on the direction of Indo Borax i.e., Indo Borax and State Trading go up and down completely randomly.

Pair Corralation between Indo Borax and State Trading

Assuming the 90 days trading horizon Indo Borax Chemicals is expected to under-perform the State Trading. In addition to that, Indo Borax is 1.01 times more volatile than The State Trading. It trades about -0.03 of its total potential returns per unit of risk. The State Trading is currently generating about -0.02 per unit of volatility. If you would invest  19,155  in The State Trading on September 13, 2024 and sell it today you would lose (1,731) from holding The State Trading or give up 9.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Indo Borax Chemicals  vs.  The State Trading

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 latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

State Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The State Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, State Trading is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Indo Borax and State Trading

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

The idea behind Indo Borax Chemicals and The State Trading 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.