Correlation Between Itay Financial and B Gaon

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

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

Diversification Opportunities for Itay Financial and B Gaon

0.47

Correlation Coefficient

Itay Financial  B Gaon

Very weak diversification

The 3 months correlation between Itay and GAON is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA 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 Itay Financial 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 Itay Financial AA 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 Itay Financial i.e., Itay Financial and B Gaon go up and down completely randomly.

Pair Corralation between Itay Financial and B Gaon

Assuming the 90 days trading horizon Itay Financial AA is expected to under-perform the B Gaon. In addition to that, Itay Financial is 4.71 times more volatile than B Gaon Holdings. It trades about -0.43 of its total potential returns per unit of risk. B Gaon Holdings is currently generating about 0.26 per unit of volatility. If you would invest  290,000  in B Gaon Holdings on January 30, 2024 and sell it today you would earn a total of  15,400  from holding B Gaon Holdings or generate 5.31% return on investment over 90 days.

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

Itay Financial AA  vs.  B Gaon Holdings

Itay Financial AA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itay Financial AA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

B Gaon Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in B Gaon Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, B Gaon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Itay Financial and B Gaon

The main advantage of trading using opposite Itay Financial and B Gaon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itay Financial 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 Itay Financial AA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.