Correlation Between Ion Beam and Elia Group

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

By analyzing existing cross correlation between Ion Beam Applications and Elia Group SANV, you can compare the effects of market volatilities on Ion Beam and Elia Group 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 Ion Beam with a short position of Elia Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ion Beam and Elia Group.

Diversification Opportunities for Ion Beam and Elia Group

-0.66

Correlation Coefficient

Ion Beam  Elia Group

Excellent diversification

The 3 months correlation between Ion and Elia is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications and Elia Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elia Group SANV and Ion Beam 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 Ion Beam Applications are associated (or correlated) with Elia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elia Group SANV has no effect on the direction of Ion Beam i.e., Ion Beam and Elia Group go up and down completely randomly.

Pair Corralation between Ion Beam and Elia Group

Assuming the 90 days trading horizon Ion Beam Applications is expected to under-perform the Elia Group. But the stock apears to be less risky and, when comparing its historical volatility, Ion Beam Applications is 1.4 times less risky than Elia Group. The stock trades about -0.08 of its potential returns per unit of risk. The Elia Group SANV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,238  in Elia Group SANV on December 26, 2024 and sell it today you would earn a total of  962.00  from holding Elia Group SANV or generate 13.29% return on investment over 90 days.

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

Ion Beam Applications  vs.  Elia Group SANV

Ion Beam Applications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ion Beam Applications 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.

Elia Group SANV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elia Group SANV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Elia Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ion Beam and Elia Group

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

The idea behind Ion Beam Applications and Elia Group SANV 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.