Correlation Between ICON Project and Polygon

Can any of the company-specific risk be diversified away by investing in both ICON Project and Polygon 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 ICON Project and Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICON Project and Polygon, you can compare the effects of market volatilities on ICON Project and Polygon 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 ICON Project with a short position of Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON Project and Polygon.

Diversification Opportunities for ICON Project and Polygon

0.76

Correlation Coefficient

ICON Project  Polygon

Poor diversification

The 3 months correlation between ICON and Polygon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon and ICON Project 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 ICON Project are associated (or correlated) with Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of ICON Project i.e., ICON Project and Polygon go up and down completely randomly.

Pair Corralation between ICON Project and Polygon

Assuming the 90 days trading horizon ICON Project is expected to under-perform the Polygon. In addition to that, ICON Project is 1.17 times more volatile than Polygon. It trades about -0.24 of its total potential returns per unit of risk. Polygon is currently generating about -0.27 per unit of volatility. If you would invest  105.00  in Polygon on January 25, 2024 and sell it today you would lose (32.00) from holding Polygon or give up 30.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ICON Project  vs.  Polygon

ICON Project

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICON Project are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ICON Project exhibited solid returns over the last few months and may actually be approaching a breakup point.

Polygon

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Polygon is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ICON Project and Polygon

The main advantage of trading using opposite ICON Project and Polygon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON Project position performs unexpectedly, Polygon 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 Polygon will offset losses from the drop in Polygon's long position.

The idea behind ICON Project and Polygon 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.