Correlation Between Idico JSC and Global Electrical

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Can any of the company-specific risk be diversified away by investing in both Idico JSC and Global Electrical 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 Idico JSC and Global Electrical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Idico JSC and Global Electrical Technology, you can compare the effects of market volatilities on Idico JSC and Global Electrical 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 Idico JSC with a short position of Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idico JSC and Global Electrical.

Diversification Opportunities for Idico JSC and Global Electrical

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Idico and Global is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Idico JSC and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical and Idico JSC 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 Idico JSC are associated (or correlated) with Global Electrical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Electrical has no effect on the direction of Idico JSC i.e., Idico JSC and Global Electrical go up and down completely randomly.

Pair Corralation between Idico JSC and Global Electrical

Assuming the 90 days trading horizon Idico JSC is expected to generate 2.78 times less return on investment than Global Electrical. But when comparing it to its historical volatility, Idico JSC is 2.94 times less risky than Global Electrical. It trades about 0.06 of its potential returns per unit of risk. Global Electrical Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,801,945  in Global Electrical Technology on August 31, 2024 and sell it today you would earn a total of  908,055  from holding Global Electrical Technology or generate 50.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy65.95%
ValuesDaily Returns

Idico JSC  vs.  Global Electrical Technology

 Performance 
       Timeline  
Idico JSC 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Idico JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Global Electrical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Global Electrical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Idico JSC and Global Electrical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Idico JSC and Global Electrical

The main advantage of trading using opposite Idico JSC and Global Electrical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idico JSC position performs unexpectedly, Global Electrical 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 Global Electrical will offset losses from the drop in Global Electrical's long position.
The idea behind Idico JSC and Global Electrical Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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