Correlation Between LED IBond and Shape Robotics

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

By analyzing existing cross correlation between LED iBond International and Shape Robotics AS, you can compare the effects of market volatilities on LED IBond and Shape Robotics 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 LED IBond with a short position of Shape Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LED IBond and Shape Robotics.

Diversification Opportunities for LED IBond and Shape Robotics

0.39

Correlation Coefficient

LED IBond  Shape Robotics

Weak diversification

The 3 months correlation between LED and Shape is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding LED iBond International and Shape Robotics AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shape Robotics AS and LED IBond 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 LED iBond International are associated (or correlated) with Shape Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shape Robotics AS has no effect on the direction of LED IBond i.e., LED IBond and Shape Robotics go up and down completely randomly.

Pair Corralation between LED IBond and Shape Robotics

Assuming the 90 days trading horizon LED iBond International is expected to generate 3.06 times more return on investment than Shape Robotics. However, LED IBond is 3.06 times more volatile than Shape Robotics AS. It trades about 0.03 of its potential returns per unit of risk. Shape Robotics AS is currently generating about -0.38 per unit of risk. If you would invest  32.00  in LED iBond International on September 23, 2024 and sell it today you would lose (3.00) from holding LED iBond International or give up 9.38% of portfolio value over 90 days.

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

LED iBond International  vs.  Shape Robotics AS

LED iBond International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LED iBond International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, LED IBond displayed solid returns over the last few months and may actually be approaching a breakup point.

Shape Robotics AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shape Robotics AS 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 fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with LED IBond and Shape Robotics

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

The idea behind LED iBond International and Shape Robotics AS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.