Correlation Between Ion Beam and Exmar NV

Can any of the company-specific risk be diversified away by investing in both Ion Beam and Exmar NV 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 Exmar NV 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 Exmar NV, you can compare the effects of market volatilities on Ion Beam and Exmar NV 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 Exmar NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ion Beam and Exmar NV.

Diversification Opportunities for Ion Beam and Exmar NV

0.25

Correlation Coefficient

Ion Beam  Exmar NV

Modest diversification

The 3 months correlation between Ion and Exmar is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications and Exmar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exmar NV 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 Exmar NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exmar NV has no effect on the direction of Ion Beam i.e., Ion Beam and Exmar NV go up and down completely randomly.

Pair Corralation between Ion Beam and Exmar NV

Assuming the 90 days trading horizon Ion Beam is expected to generate 10.04 times less return on investment than Exmar NV. But when comparing it to its historical volatility, Ion Beam Applications is 2.94 times less risky than Exmar NV. It trades about 0.09 of its potential returns per unit of risk. Exmar NV is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  797.00  in Exmar NV on September 15, 2024 and sell it today you would earn a total of  341.00  from holding Exmar NV or generate 42.79% return on investment over 90 days.

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

Ion Beam Applications  vs.  Exmar NV

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, Ion Beam is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Exmar NV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exmar NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Exmar NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ion Beam and Exmar NV

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

The idea behind Ion Beam Applications and Exmar NV 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.