Correlation Between Indo Borax and Embassy Office

Can any of the company-specific risk be diversified away by investing in both Indo Borax and Embassy Office 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 Indo Borax and Embassy Office into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indo Borax Chemicals and Embassy Office Parks, you can compare the effects of market volatilities on Indo Borax and Embassy Office 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 Indo Borax with a short position of Embassy Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Borax and Embassy Office.

Diversification Opportunities for Indo Borax and Embassy Office

0.65

Correlation Coefficient

Indo Borax  Embassy Office

Poor diversification

The 3 months correlation between Indo and Embassy is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Indo Borax Chemicals and Embassy Office Parks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embassy Office Parks and Indo Borax 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 Indo Borax Chemicals are associated (or correlated) with Embassy Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embassy Office Parks has no effect on the direction of Indo Borax i.e., Indo Borax and Embassy Office go up and down completely randomly.

Pair Corralation between Indo Borax and Embassy Office

Assuming the 90 days trading horizon Indo Borax Chemicals is expected to generate 2.55 times more return on investment than Embassy Office. However, Indo Borax is 2.55 times more volatile than Embassy Office Parks. It trades about 0.05 of its potential returns per unit of risk. Embassy Office Parks is currently generating about 0.05 per unit of risk. If you would invest  17,612  in Indo Borax Chemicals on July 6, 2024 and sell it today you would earn a total of  2,334  from holding Indo Borax Chemicals or generate 13.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Indo Borax Chemicals  vs.  Embassy Office Parks

Indo Borax Chemicals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Borax Chemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Indo Borax is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Embassy Office Parks

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embassy Office Parks are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Embassy Office may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Indo Borax and Embassy Office

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

The idea behind Indo Borax Chemicals and Embassy Office Parks 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.