Correlation Between Tubize Fin and Ion Beam

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

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

Diversification Opportunities for Tubize Fin and Ion Beam

0.69

Correlation Coefficient

Tubize Fin  Ion Beam

Poor diversification

The 3 months correlation between Tubize and Ion is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tubize Fin 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 Tubize Fin 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 Tubize Fin 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 Tubize Fin i.e., Tubize Fin and Ion Beam go up and down completely randomly.

Pair Corralation between Tubize Fin and Ion Beam

Assuming the 90 days trading horizon Tubize Fin is expected to generate 1.8 times less return on investment than Ion Beam. But when comparing it to its historical volatility, Tubize Fin is 1.59 times less risky than Ion Beam. It trades about 0.11 of its potential returns per unit of risk. Ion Beam Applications is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,128  in Ion Beam Applications on September 1, 2024 and sell it today you would earn a total of  268.00  from holding Ion Beam Applications or generate 23.76% return on investment over 90 days.

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

Tubize Fin  vs.  Ion Beam Applications

Tubize Fin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tubize Fin are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Tubize Fin reported solid returns over the last few months and may actually be approaching a breakup point.

Ion Beam Applications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ion Beam Applications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ion Beam reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tubize Fin and Ion Beam

The main advantage of trading using opposite Tubize Fin and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tubize Fin 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 Tubize Fin 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.

Check out your portfolio center.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.