Correlation Between IBU Tec and APPLIED MATERIALS

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

By analyzing existing cross correlation between IBU tec advanced materials and APPLIED MATERIALS, you can compare the effects of market volatilities on IBU Tec and APPLIED MATERIALS 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 IBU Tec with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBU Tec and APPLIED MATERIALS.

Diversification Opportunities for IBU Tec and APPLIED MATERIALS

0.38

Correlation Coefficient

IBU Tec  APPLIED MATERIALS

Weak diversification

The 3 months correlation between IBU and APPLIED is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding IBU tec advanced materials and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and IBU Tec 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 IBU tec advanced materials are associated (or correlated) with APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of IBU Tec i.e., IBU Tec and APPLIED MATERIALS go up and down completely randomly.

Pair Corralation between IBU Tec and APPLIED MATERIALS

Assuming the 90 days trading horizon IBU tec advanced materials is expected to generate 1.79 times more return on investment than APPLIED MATERIALS. However, IBU Tec is 1.79 times more volatile than APPLIED MATERIALS. It trades about 0.15 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about 0.22 per unit of risk. If you would invest  582.00  in IBU tec advanced materials on April 22, 2025 and sell it today you would earn a total of  250.00  from holding IBU tec advanced materials or generate 42.96% return on investment over 90 days.

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

IBU tec advanced materials  vs.  APPLIED MATERIALS

IBU tec advanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IBU tec advanced materials are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IBU Tec unveiled solid returns over the last few months and may actually be approaching a breakup point.

APPLIED MATERIALS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in APPLIED MATERIALS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, APPLIED MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IBU Tec and APPLIED MATERIALS

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

The idea behind IBU tec advanced materials and APPLIED MATERIALS 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.