Correlation Between MALAWI PROPERTY and ICON PROPERTIES

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

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

Diversification Opportunities for MALAWI PROPERTY and ICON PROPERTIES

0.9

Correlation Coefficient

MALAWI PROPERTY  ICON PROPERTIES

Almost no diversification

The 3 months correlation between MALAWI and ICON is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MALAWI PROPERTY INVESTMENT and ICON PROPERTIES LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PROPERTIES and MALAWI PROPERTY 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 MALAWI PROPERTY INVESTMENT are associated (or correlated) with ICON PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PROPERTIES has no effect on the direction of MALAWI PROPERTY i.e., MALAWI PROPERTY and ICON PROPERTIES go up and down completely randomly.

Pair Corralation between MALAWI PROPERTY and ICON PROPERTIES

Assuming the 90 days trading horizon MALAWI PROPERTY INVESTMENT is expected to generate 1.15 times more return on investment than ICON PROPERTIES. However, MALAWI PROPERTY is 1.15 times more volatile than ICON PROPERTIES LIMITED. It trades about 0.2 of its potential returns per unit of risk. ICON PROPERTIES LIMITED is currently generating about 0.12 per unit of risk. If you would invest  1,488  in MALAWI PROPERTY INVESTMENT on October 26, 2024 and sell it today you would earn a total of  412.00  from holding MALAWI PROPERTY INVESTMENT or generate 27.69% return on investment over 90 days.

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

MALAWI PROPERTY INVESTMENT  vs.  ICON PROPERTIES LIMITED

MALAWI PROPERTY INVE

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MALAWI PROPERTY INVESTMENT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, MALAWI PROPERTY displayed solid returns over the last few months and may actually be approaching a breakup point.

ICON PROPERTIES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICON PROPERTIES LIMITED are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ICON PROPERTIES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MALAWI PROPERTY and ICON PROPERTIES

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

The idea behind MALAWI PROPERTY INVESTMENT and ICON PROPERTIES LIMITED 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.