Correlation Between ESGL Holdings and Iconic Sports

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

By analyzing existing cross correlation between ESGL Holdings Limited and Iconic Sports Acquisition, you can compare the effects of market volatilities on ESGL Holdings and Iconic Sports 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 ESGL Holdings with a short position of Iconic Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and Iconic Sports.

Diversification Opportunities for ESGL Holdings and Iconic Sports

0.63

Correlation Coefficient

ESGL Holdings  Iconic Sports

Poor diversification

The 3 months correlation between ESGL and Iconic is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Iconic Sports Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iconic Sports Acquisition and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with Iconic Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iconic Sports Acquisition has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and Iconic Sports go up and down completely randomly.

Pair Corralation between ESGL Holdings and Iconic Sports

If you would invest  1.17  in ESGL Holdings Limited on September 28, 2024 and sell it today you would earn a total of  0.43  from holding ESGL Holdings Limited or generate 36.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.47%
Values	Daily Returns

ESGL Holdings Limited  vs.  Iconic Sports Acquisition

ESGL Holdings Limited

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days ESGL Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile essential indicators, ESGL Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Iconic Sports Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ESGL Holdings and Iconic Sports

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

The idea behind ESGL Holdings Limited and Iconic Sports Acquisition 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.