Correlation Between NYSE Composite and Ionix Technology

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

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

Diversification Opportunities for NYSE Composite and Ionix Technology

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Correlation Coefficient

NYSE Composite  Ionix Technology

Pay attention - limited upside

The 3 months correlation between NYSE and Ionix is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ionix Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ionix Technology and NYSE Composite 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 NYSE Composite are associated (or correlated) with Ionix Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ionix Technology has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ionix Technology go up and down completely randomly.

Pair Corralation between NYSE Composite and Ionix Technology

Assuming the 90 days trading horizon NYSE Composite is expected to generate 13.0 times less return on investment than Ionix Technology. But when comparing it to its historical volatility, NYSE Composite is 29.1 times less risky than Ionix Technology. It trades about 0.08 of its potential returns per unit of risk. Ionix Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.10  in Ionix Technology on September 14, 2024 and sell it today you would lose (1.09) from holding Ionix Technology or give up 99.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.49%
Values	Daily Returns

NYSE Composite  vs.  Ionix Technology

Pair Trading with NYSE Composite and Ionix Technology

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

The idea behind NYSE Composite and Ionix Technology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.