Correlation Between Insas Bhd and Icon Offshore

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

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

Diversification Opportunities for Insas Bhd and Icon Offshore

0.46

Correlation Coefficient

Insas Bhd  Icon Offshore

Very weak diversification

The 3 months correlation between Insas and Icon is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Insas Bhd 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 Insas Bhd 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 Insas Bhd 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 Insas Bhd i.e., Insas Bhd and Icon Offshore go up and down completely randomly.

Pair Corralation between Insas Bhd and Icon Offshore

Assuming the 90 days trading horizon Insas Bhd is expected to under-perform the Icon Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Insas Bhd is 2.39 times less risky than Icon Offshore. The stock trades about -0.07 of its potential returns per unit of risk. The Icon Offshore Bhd is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  114.00  in Icon Offshore Bhd on September 12, 2024 and sell it today you would lose (13.00) from holding Icon Offshore Bhd or give up 11.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Insas Bhd  vs.  Icon Offshore Bhd

Insas Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insas Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Insas Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 Insas Bhd and Icon Offshore

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

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.