Correlation Between Ion Beam and Koninklijke Philips

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

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

Diversification Opportunities for Ion Beam and Koninklijke Philips

0.51

Correlation Coefficient

Ion Beam  Koninklijke Philips

Very weak diversification

The 3 months correlation between Ion and Koninklijke is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips and Ion Beam 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 Ion Beam Applications are associated (or correlated) with Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of Ion Beam i.e., Ion Beam and Koninklijke Philips go up and down completely randomly.

Pair Corralation between Ion Beam and Koninklijke Philips

Assuming the 90 days horizon Ion Beam Applications is expected to under-perform the Koninklijke Philips. In addition to that, Ion Beam is 1.5 times more volatile than Koninklijke Philips NV. It trades about -0.3 of its total potential returns per unit of risk. Koninklijke Philips NV is currently generating about -0.3 per unit of volatility. If you would invest  2,724  in Koninklijke Philips NV on September 30, 2024 and sell it today you would lose (167.00) from holding Koninklijke Philips NV or give up 6.13% of portfolio value over 90 days.

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

Ion Beam Applications  vs.  Koninklijke Philips NV

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. Despite latest unfluctuating performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Koninklijke Philips

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koninklijke Philips NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ion Beam and Koninklijke Philips

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

The idea behind Ion Beam Applications and Koninklijke Philips NV 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.