Correlation Between Aehr Test and Icon Energy
Can any of the company-specific risk be diversified away by investing in both Aehr Test and Icon Energy 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 Aehr Test and Icon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aehr Test Systems and Icon Energy Corp, you can compare the effects of market volatilities on Aehr Test and Icon Energy 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 Aehr Test with a short position of Icon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aehr Test and Icon Energy.
Diversification Opportunities for Aehr Test and Icon Energy
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aehr and Icon is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Aehr Test Systems and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp and Aehr Test 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 Aehr Test Systems are associated (or correlated) with Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of Aehr Test i.e., Aehr Test and Icon Energy go up and down completely randomly.
Pair Corralation between Aehr Test and Icon Energy
Given the investment horizon of 90 days Aehr Test is expected to generate 20.65 times less return on investment than Icon Energy. But when comparing it to its historical volatility, Aehr Test Systems is 1.05 times less risky than Icon Energy. It trades about 0.01 of its potential returns per unit of risk. Icon Energy Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 203.00 in Icon Energy Corp on September 5, 2024 and sell it today you would earn a total of 53.00 from holding Icon Energy Corp or generate 26.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aehr Test Systems vs. Icon Energy Corp
Performance |
| Timeline |
| Aehr Test Systems |
| Icon Energy Corp |
Aehr Test and Icon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aehr Test and Icon Energy
The main advantage of trading using opposite Aehr Test and Icon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aehr Test position performs unexpectedly, Icon Energy 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 Energy will offset losses from the drop in Icon Energy's long position.| Aehr Test vs. Photronics | Aehr Test vs. Lam Research Corp | Aehr Test vs. KLA Tencor | Aehr Test vs. Kulicke and Soffa |
| Icon Energy vs. The Mosaic | Icon Energy vs. Entegris | Icon Energy vs. Luxfer Holdings PLC | Icon Energy vs. Aehr Test Systems |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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