Correlation Between Econocom Group and Ion Beam

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

By analyzing existing cross correlation between Econocom Group SANV and Ion Beam Applications, you can compare the effects of market volatilities on Econocom Group and Ion Beam 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 Econocom Group with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Econocom Group and Ion Beam.

Diversification Opportunities for Econocom Group and Ion Beam

-0.12

Correlation Coefficient

Econocom Group  Ion Beam

Good diversification

The 3 months correlation between Econocom and Ion is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Econocom Group SANV and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and Econocom Group 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 Econocom Group SANV are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Econocom Group i.e., Econocom Group and Ion Beam go up and down completely randomly.

Pair Corralation between Econocom Group and Ion Beam

Assuming the 90 days trading horizon Econocom Group SANV is expected to under-perform the Ion Beam. But the stock apears to be less risky and, when comparing its historical volatility, Econocom Group SANV is 1.68 times less risky than Ion Beam. The stock trades about -0.1 of its potential returns per unit of risk. The Ion Beam Applications is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,370  in Ion Beam Applications on September 19, 2024 and sell it today you would lose (78.00) from holding Ion Beam Applications or give up 5.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Econocom Group SANV  vs.  Ion Beam Applications

Econocom Group SANV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Econocom Group SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ion Beam is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Econocom Group and Ion Beam

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

The idea behind Econocom Group SANV and Ion Beam Applications 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.