Correlation Between Alliance Financial and Icon Offshore
Can any of the company-specific risk be diversified away by investing in both Alliance Financial and Icon Offshore 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 Alliance Financial and Icon Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Financial Group and Icon Offshore Bhd, you can compare the effects of market volatilities on Alliance Financial and Icon Offshore 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 Alliance Financial with a short position of Icon Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and Icon Offshore.
Diversification Opportunities for Alliance Financial and Icon Offshore
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alliance and Icon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Icon Offshore Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Offshore Bhd and Alliance Financial 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 Alliance Financial Group are associated (or correlated) with Icon Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Offshore Bhd has no effect on the direction of Alliance Financial i.e., Alliance Financial and Icon Offshore go up and down completely randomly.
Pair Corralation between Alliance Financial and Icon Offshore
Assuming the 90 days trading horizon Alliance Financial Group is expected to generate 0.82 times more return on investment than Icon Offshore. However, Alliance Financial Group is 1.22 times less risky than Icon Offshore. It trades about 0.24 of its potential returns per unit of risk. Icon Offshore Bhd is currently generating about -0.04 per unit of risk. If you would invest 440.00 in Alliance Financial Group on August 31, 2024 and sell it today you would earn a total of 48.00 from holding Alliance Financial Group or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Alliance Financial Group vs. Icon Offshore Bhd
Performance |
| Timeline |
| Alliance Financial |
| Icon Offshore Bhd |
Alliance Financial and Icon Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Financial and Icon Offshore
The main advantage of trading using opposite Alliance Financial and Icon Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Financial position performs unexpectedly, Icon Offshore 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 Offshore will offset losses from the drop in Icon Offshore's long position.| Alliance Financial vs. Aeon Credit Service | Alliance Financial vs. Digistar Bhd | Alliance Financial vs. Minetech Resources Bhd | Alliance Financial vs. Swift Haulage Bhd |
| Icon Offshore vs. MI Technovation Bhd | Icon Offshore vs. EA Technique M | Icon Offshore vs. Pantech Group Holdings | Icon Offshore vs. Berjaya Food Bhd |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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