Correlation Between 9F and International Business

Can any of the company-specific risk be diversified away by investing in both 9F and International Business 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 9F and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 9F Inc and International Business Machines, you can compare the effects of market volatilities on 9F and International Business 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 9F with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of 9F and International Business.

Diversification Opportunities for 9F and International Business

0.22

Correlation Coefficient

9F  International Business

Modest diversification

The 3 months correlation between 9F and International is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding 9F Inc and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and 9F 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 9F Inc are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of 9F i.e., 9F and International Business go up and down completely randomly.

Pair Corralation between 9F and International Business

Considering the 90-day investment horizon 9F Inc is expected to generate 8.54 times more return on investment than International Business. However, 9F is 8.54 times more volatile than International Business Machines. It trades about 0.04 of its potential returns per unit of risk. International Business Machines is currently generating about 0.15 per unit of risk. If you would invest  160.00  in 9F Inc on September 2, 2024 and sell it today you would lose (11.00) from holding 9F Inc or give up 6.88% of portfolio value over 90 days.

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

9F Inc  vs.  International Business Machine

9F Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 9F Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, 9F unveiled solid returns over the last few months and may actually be approaching a breakup point.

International Business

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 9F and International Business

The main advantage of trading using opposite 9F and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 9F position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.

The idea behind 9F Inc and International Business Machines 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.

Check out your portfolio center.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.