Correlation Between Inter Industries and Libra Insurance

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

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

Diversification Opportunities for Inter Industries and Libra Insurance

0.29

Correlation Coefficient

Inter Industries  Libra Insurance

Modest diversification

The 3 months correlation between Inter and Libra is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Inter Industries and Libra Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libra Insurance and Inter Industries 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 Inter Industries are associated (or correlated) with Libra Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libra Insurance has no effect on the direction of Inter Industries i.e., Inter Industries and Libra Insurance go up and down completely randomly.

Pair Corralation between Inter Industries and Libra Insurance

Assuming the 90 days trading horizon Inter Industries is expected to generate 17.64 times less return on investment than Libra Insurance. In addition to that, Inter Industries is 1.07 times more volatile than Libra Insurance. It trades about 0.02 of its total potential returns per unit of risk. Libra Insurance is currently generating about 0.34 per unit of volatility. If you would invest  45,093  in Libra Insurance on September 29, 2024 and sell it today you would earn a total of  59,907  from holding Libra Insurance or generate 132.85% return on investment over 90 days.

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

Inter Industries  vs.  Libra Insurance

Inter Industries

Risk-Adjusted Performance

6 of 100

Modest

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

Libra Insurance

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Libra Insurance are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Libra Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inter Industries and Libra Insurance

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

The idea behind Inter Industries and Libra Insurance 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.