Correlation Between Iodm and ECS Botanics

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

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

Diversification Opportunities for Iodm and ECS Botanics

-0.37

Correlation Coefficient

Iodm  ECS Botanics

Very good diversification

The 3 months correlation between Iodm and ECS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Iodm and ECS Botanics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECS Botanics Holdings and Iodm 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 Iodm are associated (or correlated) with ECS Botanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECS Botanics Holdings has no effect on the direction of Iodm i.e., Iodm and ECS Botanics go up and down completely randomly.

Pair Corralation between Iodm and ECS Botanics

Assuming the 90 days trading horizon Iodm is expected to under-perform the ECS Botanics. In addition to that, Iodm is 1.05 times more volatile than ECS Botanics Holdings. It trades about -0.07 of its total potential returns per unit of risk. ECS Botanics Holdings is currently generating about 0.09 per unit of volatility. If you would invest  1.50  in ECS Botanics Holdings on October 7, 2024 and sell it today you would earn a total of  0.20  from holding ECS Botanics Holdings or generate 13.33% return on investment over 90 days.

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

Iodm  vs.  ECS Botanics Holdings

Iodm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iodm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Iodm is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ECS Botanics Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECS Botanics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ECS Botanics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Iodm and ECS Botanics

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

The idea behind Iodm and ECS Botanics Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.