Correlation Between Olin and Iofina Plc
Can any of the company-specific risk be diversified away by investing in both Olin and Iofina Plc 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 Olin and Iofina Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olin Corporation and Iofina plc, you can compare the effects of market volatilities on Olin and Iofina Plc 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 Olin with a short position of Iofina Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olin and Iofina Plc.
Diversification Opportunities for Olin and Iofina Plc
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Olin and Iofina is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Olin Corp. and Iofina plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iofina plc and Olin 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 Olin Corporation are associated (or correlated) with Iofina Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iofina plc has no effect on the direction of Olin i.e., Olin and Iofina Plc go up and down completely randomly.
Pair Corralation between Olin and Iofina Plc
Considering the 90-day investment horizon Olin Corporation is expected to under-perform the Iofina Plc. But the stock apears to be less risky and, when comparing its historical volatility, Olin Corporation is 1.6 times less risky than Iofina Plc. The stock trades about -0.06 of its potential returns per unit of risk. The Iofina plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Iofina plc on August 28, 2024 and sell it today you would lose (1.00) from holding Iofina plc or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Olin Corp. vs. Iofina plc
Performance |
| Timeline |
| Olin |
| Iofina plc |
Olin and Iofina Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olin and Iofina Plc
The main advantage of trading using opposite Olin and Iofina Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olin position performs unexpectedly, Iofina Plc 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 Iofina Plc will offset losses from the drop in Iofina Plc's long position.The idea behind Olin Corporation and Iofina plc 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.| Iofina Plc vs. First Graphene | Iofina Plc vs. HUMANA INC | Iofina Plc vs. Aquagold International | Iofina Plc vs. Barloworld Ltd ADR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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