Correlation Between Iridium Communications and TIMES CHINA
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and TIMES CHINA 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 Iridium Communications and TIMES CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and TIMES CHINA HLDGS, you can compare the effects of market volatilities on Iridium Communications and TIMES CHINA 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 Iridium Communications with a short position of TIMES CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and TIMES CHINA.
Diversification Opportunities for Iridium Communications and TIMES CHINA
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iridium and TIMES is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and TIMES CHINA HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIMES CHINA HLDGS and Iridium Communications 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 Iridium Communications are associated (or correlated) with TIMES CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIMES CHINA HLDGS has no effect on the direction of Iridium Communications i.e., Iridium Communications and TIMES CHINA go up and down completely randomly.
Pair Corralation between Iridium Communications and TIMES CHINA
Assuming the 90 days horizon Iridium Communications is expected to generate 0.36 times more return on investment than TIMES CHINA. However, Iridium Communications is 2.8 times less risky than TIMES CHINA. It trades about 0.07 of its potential returns per unit of risk. TIMES CHINA HLDGS is currently generating about -0.11 per unit of risk. If you would invest 2,841 in Iridium Communications on September 12, 2024 and sell it today you would earn a total of 87.00 from holding Iridium Communications or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. TIMES CHINA HLDGS
Performance |
| Timeline |
| Iridium Communications |
| TIMES CHINA HLDGS |
Iridium Communications and TIMES CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and TIMES CHINA
The main advantage of trading using opposite Iridium Communications and TIMES CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, TIMES CHINA 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 TIMES CHINA will offset losses from the drop in TIMES CHINA's long position.| Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. SIVERS SEMICONDUCTORS AB | Iridium Communications vs. Norsk Hydro ASA | Iridium Communications vs. Reliance Steel Aluminum |
| TIMES CHINA vs. WisdomTree Investments | TIMES CHINA vs. SIDETRADE EO 1 | TIMES CHINA vs. Chuangs China Investments | TIMES CHINA vs. SALESFORCE INC CDR |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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