Correlation Between Iridium Communications and Greek Organization

Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Greek Organization 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 Iridium Communications and Greek Organization into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Iridium Communications and Greek Organization

0.37

Correlation Coefficient

Iridium Communications  Greek Organization

Weak diversification

The 3 months correlation between Iridium and Greek is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Greek Organization of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greek Organization and Iridium Communications 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 Iridium Communications are associated (or correlated) with Greek Organization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greek Organization has no effect on the direction of Iridium Communications i.e., Iridium Communications and Greek Organization go up and down completely randomly.

Pair Corralation between Iridium Communications and Greek Organization

Assuming the 90 days horizon Iridium Communications is expected to generate 1.19 times more return on investment than Greek Organization. However, Iridium Communications is 1.19 times more volatile than Greek Organization of. It trades about 0.1 of its potential returns per unit of risk. Greek Organization of is currently generating about 0.03 per unit of risk. If you would invest  2,691  in Iridium Communications on October 6, 2024 and sell it today you would earn a total of  239.00  from holding Iridium Communications or generate 8.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Iridium Communications  vs.  Greek Organization of

Iridium Communications

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Iridium Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Greek Organization

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greek Organization of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Greek Organization is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Iridium Communications and Greek Organization

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

The idea behind Iridium Communications and Greek Organization of 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.