Correlation Between Steel Hawk and Icon Offshore

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

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

Diversification Opportunities for Steel Hawk and Icon Offshore

-0.42

Correlation Coefficient

Steel Hawk  Icon Offshore

Very good diversification

The 3 months correlation between Steel and Icon is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Steel Hawk 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 Steel Hawk 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 Steel Hawk 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 Steel Hawk i.e., Steel Hawk and Icon Offshore go up and down completely randomly.

Pair Corralation between Steel Hawk and Icon Offshore

Assuming the 90 days trading horizon Steel Hawk Berhad is expected to generate 2.43 times more return on investment than Icon Offshore. However, Steel Hawk is 2.43 times more volatile than Icon Offshore Bhd. It trades about 0.02 of its potential returns per unit of risk. Icon Offshore Bhd is currently generating about 0.05 per unit of risk. If you would invest  75.00  in Steel Hawk Berhad on October 27, 2024 and sell it today you would lose (28.00) from holding Steel Hawk Berhad or give up 37.33% of portfolio value over 90 days.

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

Steel Hawk Berhad  vs.  Icon Offshore Bhd

Steel Hawk Berhad

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Hawk Berhad are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Steel Hawk 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 latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Steel Hawk and Icon Offshore

The main advantage of trading using opposite Steel Hawk and Icon Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Hawk 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 Steel Hawk 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.