Correlation Between ICON Project and THX

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Can any of the company-specific risk be diversified away by investing in both ICON Project and THX 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 THX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON Project and THX, you can compare the effects of market volatilities on ICON Project and THX 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 THX. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON Project and THX.

Diversification Opportunities for ICON Project and THX

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ICON and THX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and THX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THX 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 THX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THX has no effect on the direction of ICON Project i.e., ICON Project and THX go up and down completely randomly.

Pair Corralation between ICON Project and THX

Assuming the 90 days trading horizon ICON Project is expected to generate 1.22 times more return on investment than THX. However, ICON Project is 1.22 times more volatile than THX. It trades about 0.01 of its potential returns per unit of risk. THX is currently generating about -0.05 per unit of risk. If you would invest  76.00  in ICON Project on December 30, 2023 and sell it today you would lose (40.00) from holding ICON Project or give up 52.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy74.46%
ValuesDaily Returns

ICON Project  vs.  THX

 Performance 
       Timeline  
ICON Project 

Risk-Adjusted Performance

10 of 100

 
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High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ICON Project are ranked lower than 10 (%) 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.
THX 

Risk-Adjusted Performance

0 of 100

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

ICON Project and THX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ICON Project and THX

The main advantage of trading using opposite ICON Project and THX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON Project position performs unexpectedly, THX 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 THX will offset losses from the drop in THX's long position.
The idea behind ICON Project and THX 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.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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