Correlation Between Icon Offshore and Senheng New
Can any of the company-specific risk be diversified away by investing in both Icon Offshore and Senheng New 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 Icon Offshore and Senheng New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Offshore Bhd and Senheng New Retail, you can compare the effects of market volatilities on Icon Offshore and Senheng New 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 Icon Offshore with a short position of Senheng New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Offshore and Senheng New.
Diversification Opportunities for Icon Offshore and Senheng New
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Senheng is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Icon Offshore Bhd and Senheng New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senheng New Retail and Icon Offshore 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 Icon Offshore Bhd are associated (or correlated) with Senheng New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senheng New Retail has no effect on the direction of Icon Offshore i.e., Icon Offshore and Senheng New go up and down completely randomly.
Pair Corralation between Icon Offshore and Senheng New
Assuming the 90 days trading horizon Icon Offshore Bhd is expected to generate 1.79 times more return on investment than Senheng New. However, Icon Offshore is 1.79 times more volatile than Senheng New Retail. It trades about 0.09 of its potential returns per unit of risk. Senheng New Retail is currently generating about -0.03 per unit of risk. If you would invest 37.00 in Icon Offshore Bhd on September 2, 2024 and sell it today you would earn a total of 70.00 from holding Icon Offshore Bhd or generate 189.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Offshore Bhd vs. Senheng New Retail
Performance |
| Timeline |
| Icon Offshore Bhd |
| Senheng New Retail |
Icon Offshore and Senheng New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Offshore and Senheng New
The main advantage of trading using opposite Icon Offshore and Senheng New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Offshore position performs unexpectedly, Senheng New 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 Senheng New will offset losses from the drop in Senheng New's long position.| Icon Offshore vs. Barakah Offshore Petroleum | Icon Offshore vs. Digistar Bhd | Icon Offshore vs. Minetech Resources Bhd | Icon Offshore vs. Swift Haulage Bhd |
| Senheng New vs. Digistar Bhd | Senheng New vs. Minetech Resources Bhd | Senheng New vs. Swift Haulage Bhd | Senheng New vs. Bina Darulaman 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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