Correlation Between Monks Investment and Ion Beam

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

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

Diversification Opportunities for Monks Investment and Ion Beam

0.72

Correlation Coefficient

Monks Investment  Ion Beam

Poor diversification

The 3 months correlation between Monks and Ion is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and Monks Investment 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 Monks Investment Trust are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Monks Investment i.e., Monks Investment and Ion Beam go up and down completely randomly.

Pair Corralation between Monks Investment and Ion Beam

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.6 times more return on investment than Ion Beam. However, Monks Investment Trust is 1.67 times less risky than Ion Beam. It trades about -0.06 of its potential returns per unit of risk. Ion Beam Applications is currently generating about -0.1 per unit of risk. If you would invest  126,400  in Monks Investment Trust on December 22, 2024 and sell it today you would lose (6,400) from holding Monks Investment Trust or give up 5.06% of portfolio value over 90 days.

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

Monks Investment Trust  vs.  Ion Beam Applications

Monks Investment Trust

Risk-Adjusted Performance

Very Weak

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

Ion Beam Applications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Monks Investment and Ion Beam

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

The idea behind Monks Investment Trust and Ion Beam Applications 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..