Correlation Between StShine Optical and Icares Medicus

Can any of the company-specific risk be diversified away by investing in both StShine Optical and Icares Medicus 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 StShine Optical and Icares Medicus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between StShine Optical Co and Icares Medicus, you can compare the effects of market volatilities on StShine Optical and Icares Medicus 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 StShine Optical with a short position of Icares Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of StShine Optical and Icares Medicus.

Diversification Opportunities for StShine Optical and Icares Medicus

0.29

Correlation Coefficient

StShine Optical  Icares Medicus

Modest diversification

The 3 months correlation between StShine and Icares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding StShine Optical Co and Icares Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icares Medicus and StShine Optical 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 StShine Optical Co are associated (or correlated) with Icares Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icares Medicus has no effect on the direction of StShine Optical i.e., StShine Optical and Icares Medicus go up and down completely randomly.

Pair Corralation between StShine Optical and Icares Medicus

Assuming the 90 days trading horizon StShine Optical Co is expected to under-perform the Icares Medicus. But the stock apears to be less risky and, when comparing its historical volatility, StShine Optical Co is 1.22 times less risky than Icares Medicus. The stock trades about -0.15 of its potential returns per unit of risk. The Icares Medicus is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  12,000  in Icares Medicus on October 12, 2024 and sell it today you would lose (400.00) from holding Icares Medicus or give up 3.33% of portfolio value over 90 days.

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

StShine Optical Co  vs.  Icares Medicus

StShine Optical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StShine Optical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Icares Medicus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icares Medicus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with StShine Optical and Icares Medicus

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

The idea behind StShine Optical Co and Icares Medicus 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.