Correlation Between Blackbird Plc and Image Protect

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

By analyzing existing cross correlation between Blackbird plc and Image Protect, you can compare the effects of market volatilities on Blackbird Plc and Image Protect 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 Blackbird Plc with a short position of Image Protect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackbird Plc and Image Protect.

Diversification Opportunities for Blackbird Plc and Image Protect

0.36

Correlation Coefficient

Blackbird Plc  Image Protect

Weak diversification

The 3 months correlation between Blackbird and Image is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Blackbird plc and Image Protect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Protect and Blackbird Plc 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 Blackbird plc are associated (or correlated) with Image Protect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Protect has no effect on the direction of Blackbird Plc i.e., Blackbird Plc and Image Protect go up and down completely randomly.

Pair Corralation between Blackbird Plc and Image Protect

Assuming the 90 days horizon Blackbird plc is expected to under-perform the Image Protect. But the pink sheet apears to be less risky and, when comparing its historical volatility, Blackbird plc is 18.18 times less risky than Image Protect. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Image Protect is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Image Protect on December 30, 2024 and sell it today you would lose (0.01) from holding Image Protect or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Blackbird plc  vs.  Image Protect

Blackbird plc

Risk-Adjusted Performance

Very Weak

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

Image Protect

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Image Protect are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Image Protect disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackbird Plc and Image Protect

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

The idea behind Blackbird plc and Image Protect 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.