Correlation Between Icon Offshore and Scientex Packaging

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

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

Diversification Opportunities for Icon Offshore and Scientex Packaging

-0.01

Correlation Coefficient

Icon Offshore  Scientex Packaging

Good diversification

The 3 months correlation between Icon and Scientex is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Icon Offshore Bhd and Scientex Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientex Packaging and Icon Offshore 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 Icon Offshore Bhd are associated (or correlated) with Scientex Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientex Packaging has no effect on the direction of Icon Offshore i.e., Icon Offshore and Scientex Packaging go up and down completely randomly.

Pair Corralation between Icon Offshore and Scientex Packaging

Assuming the 90 days trading horizon Icon Offshore Bhd is expected to under-perform the Scientex Packaging. In addition to that, Icon Offshore is 2.2 times more volatile than Scientex Packaging. It trades about -0.11 of its total potential returns per unit of risk. Scientex Packaging is currently generating about -0.02 per unit of volatility. If you would invest  192.00  in Scientex Packaging on September 12, 2024 and sell it today you would lose (4.00) from holding Scientex Packaging or give up 2.08% of portfolio value over 90 days.

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

Icon Offshore Bhd  vs.  Scientex Packaging

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.

Scientex Packaging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Icon Offshore and Scientex Packaging

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

The idea behind Icon Offshore Bhd and Scientex Packaging 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 Anywhere module to track or share privately all of your investments from the convenience of any device.