Correlation Between Ion Beam and Krones AG

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

By analyzing existing cross correlation between Ion Beam Applications and Krones AG ON, you can compare the effects of market volatilities on Ion Beam and Krones AG 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 Ion Beam with a short position of Krones AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ion Beam and Krones AG.

Diversification Opportunities for Ion Beam and Krones AG

0.58

Correlation Coefficient

Ion Beam  Krones AG

Very weak diversification

The 3 months correlation between Ion and Krones is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications and Krones AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krones AG ON and Ion Beam 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 Ion Beam Applications are associated (or correlated) with Krones AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krones AG ON has no effect on the direction of Ion Beam i.e., Ion Beam and Krones AG go up and down completely randomly.

Pair Corralation between Ion Beam and Krones AG

Assuming the 90 days trading horizon Ion Beam Applications is expected to under-perform the Krones AG. In addition to that, Ion Beam is 1.27 times more volatile than Krones AG ON. It trades about -0.1 of its total potential returns per unit of risk. Krones AG ON is currently generating about -0.01 per unit of volatility. If you would invest  12,370  in Krones AG ON on October 12, 2024 and sell it today you would lose (30.00) from holding Krones AG ON or give up 0.24% of portfolio value over 90 days.

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

Ion Beam Applications  vs.  Krones AG ON

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Krones AG ON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krones AG ON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Krones AG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ion Beam and Krones AG

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

The idea behind Ion Beam Applications and Krones AG ON 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.