Correlation Between IA Financial and Power

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

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

Diversification Opportunities for IA Financial and Power

0.69

Correlation Coefficient

IA Financial  Power

Poor diversification

The 3 months correlation between IAG and Power is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power and IA 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 iA Financial are associated (or correlated) with Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power has no effect on the direction of IA Financial i.e., IA Financial and Power go up and down completely randomly.

Pair Corralation between IA Financial and Power

Assuming the 90 days trading horizon iA Financial is expected to generate 0.87 times more return on investment than Power. However, iA Financial is 1.15 times less risky than Power. It trades about 0.18 of its potential returns per unit of risk. Power is currently generating about 0.11 per unit of risk. If you would invest  12,885  in iA Financial on April 23, 2025 and sell it today you would earn a total of  1,470  from holding iA Financial or generate 11.41% return on investment over 90 days.

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

iA Financial  vs.  Power

iA Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iA Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IA Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Power are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Power may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IA Financial and Power

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

The idea behind iA Financial and Power 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.