Correlation Between Mantle and IOST

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

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

Diversification Opportunities for Mantle and IOST

0.1

Correlation Coefficient

Mantle  IOST

Average diversification

The 3 months correlation between Mantle and IOST is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mantle and IOST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOST and Mantle 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 Mantle are associated (or correlated) with IOST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOST has no effect on the direction of Mantle i.e., Mantle and IOST go up and down completely randomly.

Pair Corralation between Mantle and IOST

Assuming the 90 days trading horizon Mantle is expected to generate 0.68 times more return on investment than IOST. However, Mantle is 1.47 times less risky than IOST. It trades about 0.12 of its potential returns per unit of risk. IOST is currently generating about 0.0 per unit of risk. If you would invest  73.00  in Mantle on November 19, 2024 and sell it today you would earn a total of  30.00  from holding Mantle or generate 41.1% return on investment over 90 days.

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

Mantle  vs.  IOST

Mantle

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mantle are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Mantle sustained solid returns over the last few months and may actually be approaching a breakup point.

IOST

Risk-Adjusted Performance

Very Weak

Over the last 90 days IOST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, IOST is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mantle and IOST

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

The idea behind Mantle and IOST 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.