Correlation Between Ilex Medical and Satcom Systems
Can any of the company-specific risk be diversified away by investing in both Ilex Medical and Satcom Systems 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 Ilex Medical and Satcom Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ilex Medical and Satcom Systems, you can compare the effects of market volatilities on Ilex Medical and Satcom Systems 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 Ilex Medical with a short position of Satcom Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilex Medical and Satcom Systems.
Diversification Opportunities for Ilex Medical and Satcom Systems
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ilex and Satcom is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ilex Medical and Satcom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satcom Systems and Ilex Medical 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 Ilex Medical are associated (or correlated) with Satcom Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satcom Systems has no effect on the direction of Ilex Medical i.e., Ilex Medical and Satcom Systems go up and down completely randomly.
Pair Corralation between Ilex Medical and Satcom Systems
Assuming the 90 days trading horizon Ilex Medical is expected to generate 2.19 times less return on investment than Satcom Systems. But when comparing it to its historical volatility, Ilex Medical is 2.14 times less risky than Satcom Systems. It trades about 0.08 of its potential returns per unit of risk. Satcom Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,710 in Satcom Systems on September 1, 2024 and sell it today you would earn a total of 2,240 from holding Satcom Systems or generate 47.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ilex Medical vs. Satcom Systems
Performance |
| Timeline |
| Ilex Medical |
| Satcom Systems |
Ilex Medical and Satcom Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ilex Medical and Satcom Systems
The main advantage of trading using opposite Ilex Medical and Satcom Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilex Medical position performs unexpectedly, Satcom Systems 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 Satcom Systems will offset losses from the drop in Satcom Systems' long position.The idea behind Ilex Medical and Satcom Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Satcom Systems vs. Azorim Investment Development | Satcom Systems vs. Blender Financial Technologies | Satcom Systems vs. IDI Insurance | Satcom Systems vs. Bank Leumi Le Israel |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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