Correlation Between ICOA and South Beach

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

By analyzing existing cross correlation between ICOA Inc and South Beach Spirits, you can compare the effects of market volatilities on ICOA and South Beach 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 ICOA with a short position of South Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICOA and South Beach.

Diversification Opportunities for ICOA and South Beach

0.12

Correlation Coefficient

ICOA  South Beach

Average diversification

The 3 months correlation between ICOA and South is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ICOA Inc and South Beach Spirits in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Beach Spirits and ICOA 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 ICOA Inc are associated (or correlated) with South Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Beach Spirits has no effect on the direction of ICOA i.e., ICOA and South Beach go up and down completely randomly.

Pair Corralation between ICOA and South Beach

Given the investment horizon of 90 days ICOA Inc is expected to generate 1.94 times more return on investment than South Beach. However, ICOA is 1.94 times more volatile than South Beach Spirits. It trades about 0.23 of its potential returns per unit of risk. South Beach Spirits is currently generating about 0.12 per unit of risk. If you would invest  0.01  in ICOA Inc on May 4, 2025 and sell it today you would earn a total of  0.00  from holding ICOA Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

ICOA Inc  vs.  South Beach Spirits

ICOA Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ICOA Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, ICOA sustained solid returns over the last few months and may actually be approaching a breakup point.

South Beach Spirits

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in South Beach Spirits are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, South Beach unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICOA and South Beach

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

The idea behind ICOA Inc and South Beach Spirits 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.