Correlation Between ES Ceramics and Icon Offshore

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

By analyzing existing cross correlation between ES Ceramics Technology and Icon Offshore Bhd, you can compare the effects of market volatilities on ES Ceramics and Icon Offshore 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 ES Ceramics with a short position of Icon Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Icon Offshore.

Diversification Opportunities for ES Ceramics and Icon Offshore

-0.5

Correlation Coefficient

ES Ceramics  Icon Offshore

Very good diversification

The 3 months correlation between 0100 and Icon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Icon Offshore Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Offshore Bhd and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with Icon Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Offshore Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and Icon Offshore go up and down completely randomly.

Pair Corralation between ES Ceramics and Icon Offshore

Assuming the 90 days trading horizon ES Ceramics is expected to generate 11.47 times less return on investment than Icon Offshore. But when comparing it to its historical volatility, ES Ceramics Technology is 1.18 times less risky than Icon Offshore. It trades about 0.01 of its potential returns per unit of risk. Icon Offshore Bhd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Icon Offshore Bhd on October 10, 2024 and sell it today you would earn a total of  54.00  from holding Icon Offshore Bhd or generate 112.5% return on investment over 90 days.

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

ES Ceramics Technology  vs.  Icon Offshore Bhd

ES Ceramics Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ES Ceramics Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, ES Ceramics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Icon Offshore Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Offshore Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Icon Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ES Ceramics and Icon Offshore

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

The idea behind ES Ceramics Technology and Icon Offshore Bhd 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .