Correlation Between Ab All and Icon Information

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

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

Diversification Opportunities for Ab All and Icon Information

0.28

Correlation Coefficient

Ab All  Icon Information

Modest diversification

The 3 months correlation between AMTOX and Icon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ab All Market and Icon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Information Tec and Ab All 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 Ab All Market are associated (or correlated) with Icon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Information Tec has no effect on the direction of Ab All i.e., Ab All and Icon Information go up and down completely randomly.

Pair Corralation between Ab All and Icon Information

Assuming the 90 days horizon Ab All is expected to generate 1.74 times less return on investment than Icon Information. But when comparing it to its historical volatility, Ab All Market is 1.33 times less risky than Icon Information. It trades about 0.02 of its potential returns per unit of risk. Icon Information Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,470  in Icon Information Technology on September 19, 2024 and sell it today you would earn a total of  156.00  from holding Icon Information Technology or generate 10.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Ab All Market  vs.  Icon Information Technology

Ab All Market

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab All Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab All is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Information Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Information Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Icon Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab All and Icon Information

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

The idea behind Ab All Market and Icon Information Technology 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.