Correlation Between Iridium Communications and Freightos Limited

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

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

Diversification Opportunities for Iridium Communications and Freightos Limited

0.24

Correlation Coefficient

Iridium Communications  Freightos Limited

Modest diversification

The 3 months correlation between Iridium and Freightos is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Freightos Limited Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freightos Limited and Iridium Communications 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 Iridium Communications are associated (or correlated) with Freightos Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freightos Limited has no effect on the direction of Iridium Communications i.e., Iridium Communications and Freightos Limited go up and down completely randomly.

Pair Corralation between Iridium Communications and Freightos Limited

Given the investment horizon of 90 days Iridium Communications is expected to under-perform the Freightos Limited. But the stock apears to be less risky and, when comparing its historical volatility, Iridium Communications is 36.43 times less risky than Freightos Limited. The stock trades about -0.02 of its potential returns per unit of risk. The Freightos Limited Warrants is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Freightos Limited Warrants on October 9, 2024 and sell it today you would earn a total of  2.00  from holding Freightos Limited Warrants or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	52.63%
Values	Daily Returns

Iridium Communications  vs.  Freightos Limited Warrants

Iridium Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Iridium Communications is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Freightos Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freightos Limited Warrants are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Freightos Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iridium Communications and Freightos Limited

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

The idea behind Iridium Communications and Freightos Limited Warrants 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.