Correlation Between INDIKA ENERGY and Movado

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

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

Diversification Opportunities for INDIKA ENERGY and Movado

-0.38

Correlation Coefficient

INDIKA ENERGY  Movado

Very good diversification

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

Pair Corralation between INDIKA ENERGY and Movado

Assuming the 90 days trading horizon INDIKA ENERGY is expected to under-perform the Movado. In addition to that, INDIKA ENERGY is 2.23 times more volatile than Movado Group. It trades about -0.13 of its total potential returns per unit of risk. Movado Group is currently generating about -0.03 per unit of volatility. If you would invest  2,440  in Movado Group on February 24, 2024 and sell it today you would lose (20.00) from holding Movado Group or give up 0.82% of portfolio value over 90 days.

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

INDIKA ENERGY  vs.  Movado Group

INDIKA ENERGY

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INDIKA ENERGY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, INDIKA ENERGY may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Movado Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Movado Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Movado is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INDIKA ENERGY and Movado

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

The idea behind INDIKA ENERGY and Movado Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.