Correlation Between Ardiden and Iconic Brands

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

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

Diversification Opportunities for Ardiden and Iconic Brands

-1.0

Correlation Coefficient

Ardiden  Iconic Brands

Pay attention - limited upside

The 3 months correlation between Ardiden and Iconic is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Ardiden Limited and Iconic Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iconic Brands and Ardiden 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 Ardiden Limited are associated (or correlated) with Iconic Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iconic Brands has no effect on the direction of Ardiden i.e., Ardiden and Iconic Brands go up and down completely randomly.

Pair Corralation between Ardiden and Iconic Brands

If you would invest  0.01  in Iconic Brands on August 10, 2024 and sell it today you would earn a total of  0.00  from holding Iconic Brands or generate 0.0% return on investment over 90 days.

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

Ardiden Limited  vs.  Iconic Brands

Ardiden Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Iconic Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iconic Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iconic Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ardiden and Iconic Brands

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

The idea behind Ardiden Limited and Iconic Brands 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.