Correlation Between 001306AB5 and Iridium Communications

Can any of the company-specific risk be diversified away by investing in both 001306AB5 and Iridium Communications 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 001306AB5 and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AHS HOSP P and Iridium Communications, you can compare the effects of market volatilities on 001306AB5 and Iridium Communications 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 001306AB5 with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of 001306AB5 and Iridium Communications.

Diversification Opportunities for 001306AB5 and Iridium Communications

-0.1

Correlation Coefficient

001306AB5  Iridium Communications

Good diversification

The 3 months correlation between 001306AB5 and Iridium is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding AHS HOSP P and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and 001306AB5 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 AHS HOSP P are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of 001306AB5 i.e., 001306AB5 and Iridium Communications go up and down completely randomly.

Pair Corralation between 001306AB5 and Iridium Communications

Assuming the 90 days trading horizon AHS HOSP P is expected to under-perform the Iridium Communications. But the bond apears to be less risky and, when comparing its historical volatility, AHS HOSP P is 1.24 times less risky than Iridium Communications. The bond trades about -0.1 of its potential returns per unit of risk. The Iridium Communications is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,795  in Iridium Communications on September 15, 2024 and sell it today you would earn a total of  248.00  from holding Iridium Communications or generate 8.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	35.94%
Values	Daily Returns

AHS HOSP P  vs.  Iridium Communications

AHS HOSP P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AHS HOSP P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for AHS HOSP P investors.

Iridium Communications

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Iridium Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 001306AB5 and Iridium Communications

The main advantage of trading using opposite 001306AB5 and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 001306AB5 position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.

The idea behind AHS HOSP P and Iridium Communications 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.