Correlation Between Neo Performance and Iofina Plc

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

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

Diversification Opportunities for Neo Performance and Iofina Plc

0.33

Correlation Coefficient

Neo Performance  Iofina Plc

Weak diversification

The 3 months correlation between Neo and Iofina is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Neo Performance Materials and Iofina plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iofina plc and Neo Performance 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 Neo Performance Materials are associated (or correlated) with Iofina Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iofina plc has no effect on the direction of Neo Performance i.e., Neo Performance and Iofina Plc go up and down completely randomly.

Pair Corralation between Neo Performance and Iofina Plc

Assuming the 90 days horizon Neo Performance is expected to generate 3.45 times less return on investment than Iofina Plc. But when comparing it to its historical volatility, Neo Performance Materials is 1.9 times less risky than Iofina Plc. It trades about 0.05 of its potential returns per unit of risk. Iofina plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Iofina plc on December 28, 2024 and sell it today you would earn a total of  7.00  from holding Iofina plc or generate 30.43% return on investment over 90 days.

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

Neo Performance Materials  vs.  Iofina plc

Neo Performance Materials

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Performance Materials are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Neo Performance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Iofina plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iofina plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Iofina Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neo Performance and Iofina Plc

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

The idea behind Neo Performance Materials and Iofina plc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.