Correlation Between IDI Insurance and B Gaon

Can any of the company-specific risk be diversified away by investing in both IDI Insurance and B Gaon 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 IDI Insurance and B Gaon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IDI Insurance and B Gaon Holdings, you can compare the effects of market volatilities on IDI Insurance and B Gaon 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 IDI Insurance with a short position of B Gaon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDI Insurance and B Gaon.

Diversification Opportunities for IDI Insurance and B Gaon

-0.06

Correlation Coefficient

IDI Insurance  B Gaon

Good diversification

The 3 months correlation between IDI and GAON is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding IDI Insurance and B Gaon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Gaon Holdings and IDI Insurance 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 IDI Insurance are associated (or correlated) with B Gaon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Gaon Holdings has no effect on the direction of IDI Insurance i.e., IDI Insurance and B Gaon go up and down completely randomly.

Pair Corralation between IDI Insurance and B Gaon

Assuming the 90 days trading horizon IDI Insurance is expected to generate 1.06 times more return on investment than B Gaon. However, IDI Insurance is 1.06 times more volatile than B Gaon Holdings. It trades about -0.03 of its potential returns per unit of risk. B Gaon Holdings is currently generating about -0.11 per unit of risk. If you would invest  1,063,410  in IDI Insurance on March 8, 2024 and sell it today you would lose (39,410) from holding IDI Insurance or give up 3.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IDI Insurance  vs.  B Gaon Holdings

IDI Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDI Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IDI Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

B Gaon Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B Gaon Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with IDI Insurance and B Gaon

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

The idea behind IDI Insurance and B Gaon Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.