Correlation Between Making Science and Icape Holding

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

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

Diversification Opportunities for Making Science and Icape Holding

-0.62

Correlation Coefficient

Making Science  Icape Holding

Excellent diversification

The 3 months correlation between Making and Icape is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Making Science Group and Icape Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icape Holding and Making Science 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 Making Science Group 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 Making Science i.e., Making Science and Icape Holding go up and down completely randomly.

Pair Corralation between Making Science and Icape Holding

Assuming the 90 days trading horizon Making Science Group is expected to under-perform the Icape Holding. But the stock apears to be less risky and, when comparing its historical volatility, Making Science Group is 2.92 times less risky than Icape Holding. The stock trades about -0.1 of its potential returns per unit of risk. The Icape Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  940.00  in Icape Holding on October 24, 2024 and sell it today you would lose (40.00) from holding Icape Holding or give up 4.26% of portfolio value over 90 days.

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

Making Science Group  vs.  Icape Holding

Making Science Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Making Science Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing 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 Making Science and Icape Holding

The main advantage of trading using opposite Making Science and Icape Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Making Science 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 Making Science Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.