Correlation Between DIAMINES AND and IOL Chemicals

Can any of the company-specific risk be diversified away by investing in both DIAMINES AND and IOL Chemicals 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 DIAMINES AND and IOL Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DIAMINES AND CHEMICALS and IOL Chemicals and, you can compare the effects of market volatilities on DIAMINES AND and IOL Chemicals 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 DIAMINES AND with a short position of IOL Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIAMINES AND and IOL Chemicals.

Diversification Opportunities for DIAMINES AND and IOL Chemicals

0.7

Correlation Coefficient

DIAMINES AND  IOL Chemicals

Poor diversification

The 3 months correlation between DIAMINES and IOL is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding DIAMINES AND CHEMICALS and IOL Chemicals and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOL Chemicals and DIAMINES AND 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 DIAMINES AND CHEMICALS are associated (or correlated) with IOL Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOL Chemicals has no effect on the direction of DIAMINES AND i.e., DIAMINES AND and IOL Chemicals go up and down completely randomly.

Pair Corralation between DIAMINES AND and IOL Chemicals

Assuming the 90 days trading horizon DIAMINES AND is expected to generate 12.15 times less return on investment than IOL Chemicals. But when comparing it to its historical volatility, DIAMINES AND CHEMICALS is 1.12 times less risky than IOL Chemicals. It trades about 0.02 of its potential returns per unit of risk. IOL Chemicals and is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  6,889  in IOL Chemicals and on April 24, 2025 and sell it today you would earn a total of  2,751  from holding IOL Chemicals and or generate 39.93% return on investment over 90 days.

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

DIAMINES AND CHEMICALS  vs.  IOL Chemicals and

DIAMINES AND CHEMICALS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DIAMINES AND CHEMICALS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, DIAMINES AND is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

IOL Chemicals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IOL Chemicals and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, IOL Chemicals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DIAMINES AND and IOL Chemicals

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

The idea behind DIAMINES AND CHEMICALS and IOL Chemicals and 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.