Correlation Between Supremex and IFabric Corp
Can any of the company-specific risk be diversified away by investing in both Supremex and IFabric Corp 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 Supremex and IFabric Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supremex and iFabric Corp, you can compare the effects of market volatilities on Supremex and IFabric Corp 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 Supremex with a short position of IFabric Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supremex and IFabric Corp.
Diversification Opportunities for Supremex and IFabric Corp
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Supremex and IFabric is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Supremex and iFabric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iFabric Corp and Supremex 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 Supremex are associated (or correlated) with IFabric Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iFabric Corp has no effect on the direction of Supremex i.e., Supremex and IFabric Corp go up and down completely randomly.
Pair Corralation between Supremex and IFabric Corp
Assuming the 90 days trading horizon Supremex is expected to under-perform the IFabric Corp. But the stock apears to be less risky and, when comparing its historical volatility, Supremex is 2.0 times less risky than IFabric Corp. The stock trades about -0.07 of its potential returns per unit of risk. The iFabric Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 110.00 in iFabric Corp on September 13, 2024 and sell it today you would lose (5.00) from holding iFabric Corp or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Supremex vs. iFabric Corp
Performance |
| Timeline |
| Supremex |
| iFabric Corp |
Supremex and IFabric Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supremex and IFabric Corp
The main advantage of trading using opposite Supremex and IFabric Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supremex position performs unexpectedly, IFabric Corp 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 IFabric Corp will offset losses from the drop in IFabric Corp's long position.| Supremex vs. High Liner Foods | Supremex vs. Tree Island Steel | Supremex vs. Chesswood Group Limited | Supremex vs. Hammond Power Solutions |
| IFabric Corp vs. Caldwell Partners International | IFabric Corp vs. Bri Chem Corp | IFabric Corp vs. Geodrill Limited | IFabric Corp vs. Supremex |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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