Correlation Between Link Reservations and Ionic Brands

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

By analyzing existing cross correlation between Link Reservations and Ionic Brands Corp, you can compare the effects of market volatilities on Link Reservations and Ionic Brands 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 Link Reservations with a short position of Ionic Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Reservations and Ionic Brands.

Diversification Opportunities for Link Reservations and Ionic Brands

0.0

Correlation Coefficient

Link Reservations  Ionic Brands

Pay attention - limited upside

The 3 months correlation between Link and Ionic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Link Reservations and Ionic Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ionic Brands Corp and Link Reservations 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 Link Reservations are associated (or correlated) with Ionic Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ionic Brands Corp has no effect on the direction of Link Reservations i.e., Link Reservations and Ionic Brands go up and down completely randomly.

Pair Corralation between Link Reservations and Ionic Brands

If you would invest  0.20  in Link Reservations on September 4, 2024 and sell it today you would lose (0.10) from holding Link Reservations or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Link Reservations  vs.  Ionic Brands Corp

Link Reservations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Link Reservations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Link Reservations showed solid returns over the last few months and may actually be approaching a breakup point.

Ionic Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ionic Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Ionic Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Link Reservations and Ionic Brands

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

The idea behind Link Reservations and Ionic Brands Corp 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.