Correlation Between Disney and IClick Interactive

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

By analyzing existing cross correlation between Walt Disney and iClick Interactive Asia, you can compare the effects of market volatilities on Disney and IClick Interactive 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 Disney with a short position of IClick Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and IClick Interactive.

Diversification Opportunities for Disney and IClick Interactive

0.62

Correlation Coefficient

Disney  IClick Interactive

Poor diversification

The 3 months correlation between Disney and IClick is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and iClick Interactive Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iClick Interactive Asia and Disney 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 Walt Disney are associated (or correlated) with IClick Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iClick Interactive Asia has no effect on the direction of Disney i.e., Disney and IClick Interactive go up and down completely randomly.

Pair Corralation between Disney and IClick Interactive

Considering the 90-day investment horizon Disney is expected to generate 7.17 times less return on investment than IClick Interactive. But when comparing it to its historical volatility, Walt Disney is 5.97 times less risky than IClick Interactive. It trades about 0.2 of its potential returns per unit of risk. iClick Interactive Asia is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  320.00  in iClick Interactive Asia on October 25, 2024 and sell it today you would earn a total of  535.50  from holding iClick Interactive Asia or generate 167.34% return on investment over 90 days.

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

Walt Disney  vs.  iClick Interactive Asia

Walt Disney

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

iClick Interactive Asia

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iClick Interactive Asia are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, IClick Interactive disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Disney and IClick Interactive

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

The idea behind Walt Disney and iClick Interactive Asia 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.