Correlation Between ICON Project and ME

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

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

Diversification Opportunities for ICON Project and ME

0.92

Correlation Coefficient

ICON Project  ME

Almost no diversification

The 3 months correlation between ICON and ME is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and ME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ME 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 ME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ME has no effect on the direction of ICON Project i.e., ICON Project and ME go up and down completely randomly.

Pair Corralation between ICON Project and ME

Assuming the 90 days trading horizon ICON Project is expected to under-perform the ME. But the crypto coin apears to be less risky and, when comparing its historical volatility, ICON Project is 2.27 times less risky than ME. The crypto coin trades about -0.01 of its potential returns per unit of risk. The ME is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.35  in ME on January 16, 2024 and sell it today you would lose (0.29) from holding ME or give up 82.08% of portfolio value over 90 days.

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

ICON Project  vs.  ME

ICON Project

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICON Project has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ICON Project is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ME

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ME are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ME exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICON Project and ME

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

The idea behind ICON Project and ME 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.