Correlation Between Inflection Point and ICC Holdings

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

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

Diversification Opportunities for Inflection Point and ICC Holdings

0.63

Correlation Coefficient

Inflection Point  ICC Holdings

Poor diversification

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

Pair Corralation between Inflection Point and ICC Holdings

Assuming the 90 days horizon Inflection Point is expected to generate 51.86 times less return on investment than ICC Holdings. But when comparing it to its historical volatility, Inflection Point Acquisition is 40.76 times less risky than ICC Holdings. It trades about 0.05 of its potential returns per unit of risk. ICC Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,550  in ICC Holdings on September 27, 2024 and sell it today you would earn a total of  785.00  from holding ICC Holdings or generate 50.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.2%
Values	Daily Returns

Inflection Point Acquisition  vs.  ICC Holdings

Inflection Point Acq

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Inflection Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

ICC Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICC Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Inflection Point and ICC Holdings

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

The idea behind Inflection Point Acquisition and ICC Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.