Correlation Between II Group and Forth Public
Can any of the company-specific risk be diversified away by investing in both II Group and Forth Public 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 II Group and Forth Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between II Group Public and Forth Public, you can compare the effects of market volatilities on II Group and Forth Public 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 II Group with a short position of Forth Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of II Group and Forth Public.
Diversification Opportunities for II Group and Forth Public
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IIG and Forth is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding II Group Public and Forth Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forth Public and II Group 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 II Group Public are associated (or correlated) with Forth Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forth Public has no effect on the direction of II Group i.e., II Group and Forth Public go up and down completely randomly.
Pair Corralation between II Group and Forth Public
Assuming the 90 days trading horizon II Group Public is expected to generate 13.42 times more return on investment than Forth Public. However, II Group is 13.42 times more volatile than Forth Public. It trades about 0.03 of its potential returns per unit of risk. Forth Public is currently generating about -0.05 per unit of risk. If you would invest 3,825 in II Group Public on September 3, 2024 and sell it today you would lose (3,285) from holding II Group Public or give up 85.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
II Group Public vs. Forth Public
Performance |
| Timeline |
| II Group Public |
| Forth Public |
II Group and Forth Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with II Group and Forth Public
The main advantage of trading using opposite II Group and Forth Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if II Group position performs unexpectedly, Forth Public 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 Forth Public will offset losses from the drop in Forth Public's long position.| II Group vs. Com7 PCL | II Group vs. Beryl 8 Plus | II Group vs. Hana Microelectronics Public | II Group vs. Jay Mart Public |
| Forth Public vs. Heng Leasing Capital | Forth Public vs. Hydrogen Freehold Leasehold | Forth Public vs. WHA Industrial Leasehold | Forth Public vs. Thai Coating Industrial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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