Correlation Between Icon Media and Hop On

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

By analyzing existing cross correlation between Icon Media Holdings and Hop On Inc, you can compare the effects of market volatilities on Icon Media and Hop On 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 Icon Media with a short position of Hop On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Media and Hop On.

Diversification Opportunities for Icon Media and Hop On

-0.18

Correlation Coefficient

Icon Media  Hop On

Good diversification

The 3 months correlation between Icon and Hop is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Icon Media Holdings and Hop On Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hop On Inc and Icon Media 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 Icon Media Holdings are associated (or correlated) with Hop On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hop On Inc has no effect on the direction of Icon Media i.e., Icon Media and Hop On go up and down completely randomly.

Pair Corralation between Icon Media and Hop On

Given the investment horizon of 90 days Icon Media Holdings is not expected to generate positive returns. Moreover, Icon Media is 1.28 times more volatile than Hop On Inc. It trades away all of its potential returns to assume current level of volatility. Hop On Inc is currently generating about 0.23 per unit of risk. If you would invest  0.05  in Hop On Inc on September 12, 2024 and sell it today you would earn a total of  0.03  from holding Hop On Inc or generate 60.0% return on investment over 90 days.

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

Icon Media Holdings  vs.  Hop On Inc

Icon Media Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Media Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Icon Media displayed solid returns over the last few months and may actually be approaching a breakup point.

Hop On Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hop On Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Hop On displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Icon Media and Hop On

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

The idea behind Icon Media Holdings and Hop On Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.