Correlation Between Impact Fusion and CyberAgent ADR

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

By analyzing existing cross correlation between Impact Fusion International and CyberAgent ADR, you can compare the effects of market volatilities on Impact Fusion and CyberAgent ADR 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 Impact Fusion with a short position of CyberAgent ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impact Fusion and CyberAgent ADR.

Diversification Opportunities for Impact Fusion and CyberAgent ADR

0.71

Correlation Coefficient

Impact Fusion  CyberAgent ADR

Poor diversification

The 3 months correlation between Impact and CyberAgent is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Impact Fusion International and CyberAgent ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent ADR and Impact Fusion 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 Impact Fusion International are associated (or correlated) with CyberAgent ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent ADR has no effect on the direction of Impact Fusion i.e., Impact Fusion and CyberAgent ADR go up and down completely randomly.

Pair Corralation between Impact Fusion and CyberAgent ADR

Given the investment horizon of 90 days Impact Fusion International is expected to under-perform the CyberAgent ADR. In addition to that, Impact Fusion is 5.57 times more volatile than CyberAgent ADR. It trades about -0.07 of its total potential returns per unit of risk. CyberAgent ADR is currently generating about -0.17 per unit of volatility. If you would invest  344.00  in CyberAgent ADR on October 7, 2024 and sell it today you would lose (34.00) from holding CyberAgent ADR or give up 9.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Impact Fusion International  vs.  CyberAgent ADR

Impact Fusion Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Fusion International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CyberAgent ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CyberAgent ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Impact Fusion and CyberAgent ADR

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

The idea behind Impact Fusion International and CyberAgent ADR 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.