Correlation Between Associated British and Ion Beam
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Ion Beam Applications, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Ion Beam.
Diversification Opportunities for Associated British and Ion Beam
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Associated and Ion is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods 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 Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Ion Beam go up and down completely randomly.
Pair Corralation between Associated British and Ion Beam
Assuming the 90 days trading horizon Associated British is expected to generate 1.85 times less return on investment than Ion Beam. But when comparing it to its historical volatility, Associated British Foods is 1.88 times less risky than Ion Beam. It trades about 0.04 of its potential returns per unit of risk. Ion Beam Applications is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,155 in Ion Beam Applications on August 29, 2024 and sell it today you would earn a total of 231.00 from holding Ion Beam Applications or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Ion Beam Applications
Performance |
| Timeline |
| Associated British Foods |
| Ion Beam Applications |
Associated British and Ion Beam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Ion Beam
The main advantage of trading using opposite Associated British and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Toyota Motor Corp | Associated British vs. MOL Hungarian Oil |
| Ion Beam vs. Lendinvest PLC | Ion Beam vs. Neometals | Ion Beam vs. Albion Technology General | Ion Beam vs. Jupiter Fund Management |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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