Correlation Between Ilex Medical and B Communications

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

By analyzing existing cross correlation between Ilex Medical and B Communications, you can compare the effects of market volatilities on Ilex Medical and B Communications 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 Ilex Medical with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilex Medical and B Communications.

Diversification Opportunities for Ilex Medical and B Communications

0.4

Correlation Coefficient

Ilex Medical  B Communications

Very weak diversification

The 3 months correlation between Ilex and BCOM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ilex Medical and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Ilex Medical 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 Ilex Medical are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Ilex Medical i.e., Ilex Medical and B Communications go up and down completely randomly.

Pair Corralation between Ilex Medical and B Communications

Assuming the 90 days trading horizon Ilex Medical is expected to under-perform the B Communications. In addition to that, Ilex Medical is 1.06 times more volatile than B Communications. It trades about -0.1 of its total potential returns per unit of risk. B Communications is currently generating about 0.18 per unit of volatility. If you would invest  167,000  in B Communications on November 28, 2024 and sell it today you would earn a total of  33,200  from holding B Communications or generate 19.88% return on investment over 90 days.

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

Ilex Medical  vs.  B Communications

Ilex Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ilex Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

B Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ilex Medical and B Communications

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

The idea behind Ilex Medical and B Communications 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.