Correlation Between IMCO Industries and Ashtrom

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

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

Diversification Opportunities for IMCO Industries and Ashtrom

0.79

Correlation Coefficient

IMCO Industries  Ashtrom

Poor diversification

The 3 months correlation between IMCO and Ashtrom is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding IMCO Industries and Ashtrom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtrom Group and IMCO Industries 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 IMCO Industries are associated (or correlated) with Ashtrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtrom Group has no effect on the direction of IMCO Industries i.e., IMCO Industries and Ashtrom go up and down completely randomly.

Pair Corralation between IMCO Industries and Ashtrom

Assuming the 90 days trading horizon IMCO Industries is expected to generate 1.92 times less return on investment than Ashtrom. In addition to that, IMCO Industries is 1.15 times more volatile than Ashtrom Group. It trades about 0.1 of its total potential returns per unit of risk. Ashtrom Group is currently generating about 0.23 per unit of volatility. If you would invest  517,600  in Ashtrom Group on September 29, 2024 and sell it today you would earn a total of  117,300  from holding Ashtrom Group or generate 22.66% return on investment over 90 days.

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

IMCO Industries  vs.  Ashtrom Group

IMCO Industries

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IMCO Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IMCO Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Ashtrom Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtrom Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ashtrom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IMCO Industries and Ashtrom

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

The idea behind IMCO Industries and Ashtrom Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.