Correlation Between Icad and Applied Digital

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

By analyzing existing cross correlation between icad inc and Applied Digital, you can compare the effects of market volatilities on Icad and Applied Digital 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 Icad with a short position of Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icad and Applied Digital.

Diversification Opportunities for Icad and Applied Digital

-0.11

Correlation Coefficient

Icad  Applied Digital

Good diversification

The 3 months correlation between Icad and Applied is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding icad inc and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and Icad 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 icad inc are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of Icad i.e., Icad and Applied Digital go up and down completely randomly.

Pair Corralation between Icad and Applied Digital

Given the investment horizon of 90 days icad inc is expected to generate 0.85 times more return on investment than Applied Digital. However, icad inc is 1.18 times less risky than Applied Digital. It trades about 0.06 of its potential returns per unit of risk. Applied Digital is currently generating about -0.01 per unit of risk. If you would invest  195.00  in icad inc on December 27, 2024 and sell it today you would earn a total of  25.00  from holding icad inc or generate 12.82% return on investment over 90 days.

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

icad inc  vs.  Applied Digital

icad inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in icad inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Icad exhibited solid returns over the last few months and may actually be approaching a breakup point.

Applied Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Applied Digital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Icad and Applied Digital

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

The idea behind icad inc and Applied Digital 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.