Correlation Between Broadpeak and Icape Holding

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

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

Diversification Opportunities for Broadpeak and Icape Holding

0.05

Correlation Coefficient

Broadpeak  Icape Holding

Significant diversification

The 3 months correlation between Broadpeak and Icape is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Broadpeak SA and Icape Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icape Holding and Broadpeak 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 Broadpeak SA are associated (or correlated) with Icape Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icape Holding has no effect on the direction of Broadpeak i.e., Broadpeak and Icape Holding go up and down completely randomly.

Pair Corralation between Broadpeak and Icape Holding

Assuming the 90 days trading horizon Broadpeak is expected to generate 12.09 times less return on investment than Icape Holding. But when comparing it to its historical volatility, Broadpeak SA is 2.01 times less risky than Icape Holding. It trades about 0.03 of its potential returns per unit of risk. Icape Holding is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  746.00  in Icape Holding on October 24, 2024 and sell it today you would earn a total of  154.00  from holding Icape Holding or generate 20.64% return on investment over 90 days.

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

Broadpeak SA  vs.  Icape Holding

Broadpeak SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Icape Holding

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icape Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Icape Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadpeak and Icape Holding

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

The idea behind Broadpeak SA and Icape Holding 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 CEOs Directory module to screen CEOs from public companies around the world.