Correlation Between IBL HealthCare and Towellers
Can any of the company-specific risk be diversified away by investing in both IBL HealthCare and Towellers 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 IBL HealthCare and Towellers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBL HealthCare and Towellers, you can compare the effects of market volatilities on IBL HealthCare and Towellers 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 IBL HealthCare with a short position of Towellers. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and Towellers.
Diversification Opportunities for IBL HealthCare and Towellers
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IBL and Towellers is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and Towellers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towellers and IBL HealthCare 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 IBL HealthCare are associated (or correlated) with Towellers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towellers has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and Towellers go up and down completely randomly.
Pair Corralation between IBL HealthCare and Towellers
Assuming the 90 days trading horizon IBL HealthCare is expected to generate 1.76 times more return on investment than Towellers. However, IBL HealthCare is 1.76 times more volatile than Towellers. It trades about 0.37 of its potential returns per unit of risk. Towellers is currently generating about 0.12 per unit of risk. If you would invest 2,952 in IBL HealthCare on September 2, 2024 and sell it today you would earn a total of 1,346 from holding IBL HealthCare or generate 45.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBL HealthCare vs. Towellers
Performance |
| Timeline |
| IBL HealthCare |
| Towellers |
IBL HealthCare and Towellers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBL HealthCare and Towellers
The main advantage of trading using opposite IBL HealthCare and Towellers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare position performs unexpectedly, Towellers 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 Towellers will offset losses from the drop in Towellers' long position.| IBL HealthCare vs. Masood Textile Mills | IBL HealthCare vs. Fauji Foods | IBL HealthCare vs. KSB Pumps | IBL HealthCare vs. Mari Petroleum |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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