Correlation Between ISign Media and Norden Crown

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

By analyzing existing cross correlation between iSign Media Solutions and Norden Crown Metals, you can compare the effects of market volatilities on ISign Media and Norden Crown 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 ISign Media with a short position of Norden Crown. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISign Media and Norden Crown.

Diversification Opportunities for ISign Media and Norden Crown

0.36

Correlation Coefficient

ISign Media  Norden Crown

Weak diversification

The 3 months correlation between ISign and Norden is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding iSign Media Solutions and Norden Crown Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norden Crown Metals and ISign 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 iSign Media Solutions are associated (or correlated) with Norden Crown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norden Crown Metals has no effect on the direction of ISign Media i.e., ISign Media and Norden Crown go up and down completely randomly.

Pair Corralation between ISign Media and Norden Crown

Assuming the 90 days horizon iSign Media Solutions is expected to generate 0.1 times more return on investment than Norden Crown. However, iSign Media Solutions is 10.22 times less risky than Norden Crown. It trades about -0.07 of its potential returns per unit of risk. Norden Crown Metals is currently generating about -0.02 per unit of risk. If you would invest  1,412  in iSign Media Solutions on October 11, 2024 and sell it today you would lose (35.00) from holding iSign Media Solutions or give up 2.48% of portfolio value over 90 days.

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

iSign Media Solutions  vs.  Norden Crown Metals

iSign Media Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSign Media Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ISign Media is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Norden Crown Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Norden Crown Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Norden Crown showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ISign Media and Norden Crown

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

The idea behind iSign Media Solutions and Norden Crown Metals 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.