Correlation Between Cloudpoint Technology and Icon Offshore

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

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

Diversification Opportunities for Cloudpoint Technology and Icon Offshore

-0.63

Correlation Coefficient

Cloudpoint Technology  Icon Offshore

Excellent diversification

The 3 months correlation between Cloudpoint and Icon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cloudpoint Technology Berhad 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 Cloudpoint Technology 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 Cloudpoint Technology Berhad 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 Cloudpoint Technology i.e., Cloudpoint Technology and Icon Offshore go up and down completely randomly.

Pair Corralation between Cloudpoint Technology and Icon Offshore

Assuming the 90 days trading horizon Cloudpoint Technology Berhad is expected to generate 1.14 times more return on investment than Icon Offshore. However, Cloudpoint Technology is 1.14 times more volatile than Icon Offshore Bhd. It trades about 0.14 of its potential returns per unit of risk. Icon Offshore Bhd is currently generating about -0.11 per unit of risk. If you would invest  72.00  in Cloudpoint Technology Berhad on September 14, 2024 and sell it today you would earn a total of  18.00  from holding Cloudpoint Technology Berhad or generate 25.0% return on investment over 90 days.

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

Cloudpoint Technology Berhad  vs.  Icon Offshore Bhd

Cloudpoint Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudpoint Technology Berhad are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Cloudpoint Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cloudpoint Technology and Icon Offshore

The main advantage of trading using opposite Cloudpoint Technology and Icon Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloudpoint Technology 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 Cloudpoint Technology Berhad 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.