Correlation Between ICON Project and Aelf
Can any of the company-specific risk be diversified away by investing in both ICON Project and Aelf 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 ICON Project and Aelf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON Project and aelf, you can compare the effects of market volatilities on ICON Project and Aelf 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 ICON Project with a short position of Aelf. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON Project and Aelf.
Diversification Opportunities for ICON Project and Aelf
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICON and Aelf is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and aelf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aelf and ICON Project 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 ICON Project are associated (or correlated) with Aelf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aelf has no effect on the direction of ICON Project i.e., ICON Project and Aelf go up and down completely randomly.
Pair Corralation between ICON Project and Aelf
Assuming the 90 days trading horizon ICON Project is expected to under-perform the Aelf. In addition to that, ICON Project is 1.34 times more volatile than aelf. It trades about -0.23 of its total potential returns per unit of risk. aelf is currently generating about -0.07 per unit of volatility. If you would invest 64.00 in aelf on January 26, 2024 and sell it today you would lose (6.00) from holding aelf or give up 9.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICON Project vs. aelf
Performance |
| Timeline |
| ICON Project |
| aelf |
ICON Project and Aelf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICON Project and Aelf
The main advantage of trading using opposite ICON Project and Aelf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON Project position performs unexpectedly, Aelf 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 Aelf will offset losses from the drop in Aelf's long position.The idea behind ICON Project and aelf 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.Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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