Correlation Between Iridium Communications and FingerMotion

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

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

Diversification Opportunities for Iridium Communications and FingerMotion

-0.24

Correlation Coefficient

Iridium Communications  FingerMotion

Very good diversification

The 3 months correlation between Iridium and FingerMotion is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and FingerMotion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FingerMotion and Iridium Communications 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 Iridium Communications are associated (or correlated) with FingerMotion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FingerMotion has no effect on the direction of Iridium Communications i.e., Iridium Communications and FingerMotion go up and down completely randomly.

Pair Corralation between Iridium Communications and FingerMotion

Given the investment horizon of 90 days Iridium Communications is expected to under-perform the FingerMotion. But the stock apears to be less risky and, when comparing its historical volatility, Iridium Communications is 1.5 times less risky than FingerMotion. The stock trades about -0.04 of its potential returns per unit of risk. The FingerMotion is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  117.00  in FingerMotion on January 13, 2025 and sell it today you would earn a total of  13.00  from holding FingerMotion or generate 11.11% return on investment over 90 days.

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

Iridium Communications  vs.  FingerMotion

Iridium Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iridium Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

FingerMotion

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FingerMotion are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, FingerMotion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iridium Communications and FingerMotion

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

The idea behind Iridium Communications and FingerMotion 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.