Correlation Between ICD and Humax
Can any of the company-specific risk be diversified away by investing in both ICD and Humax 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 ICD and Humax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICD Co and Humax Co, you can compare the effects of market volatilities on ICD and Humax 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 ICD with a short position of Humax. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICD and Humax.
Diversification Opportunities for ICD and Humax
Poor diversification
The 3 months correlation between ICD and Humax is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ICD Co and Humax Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax and ICD 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 ICD Co are associated (or correlated) with Humax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax has no effect on the direction of ICD i.e., ICD and Humax go up and down completely randomly.
Pair Corralation between ICD and Humax
Assuming the 90 days trading horizon ICD Co is expected to generate 1.35 times more return on investment than Humax. However, ICD is 1.35 times more volatile than Humax Co. It trades about 0.04 of its potential returns per unit of risk. Humax Co is currently generating about -0.03 per unit of risk. If you would invest 577,000 in ICD Co on December 5, 2024 and sell it today you would earn a total of 9,000 from holding ICD Co or generate 1.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ICD Co vs. Humax Co
Performance |
Timeline |
ICD Co |
Humax |
ICD and Humax Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ICD and Humax
The main advantage of trading using opposite ICD and Humax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICD position performs unexpectedly, Humax 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 Humax will offset losses from the drop in Humax's long position.ICD vs. SFA Engineering | ICD vs. APS Holdings | ICD vs. Soulbrain Holdings Co | ICD vs. JUSUNG ENGINEERING Co |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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