Correlation Between CHAR Technologies and ISign Media

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

By analyzing existing cross correlation between CHAR Technologies and iSign Media Solutions, you can compare the effects of market volatilities on CHAR Technologies and ISign Media 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 CHAR Technologies with a short position of ISign Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAR Technologies and ISign Media.

Diversification Opportunities for CHAR Technologies and ISign Media

0.22

Correlation Coefficient

CHAR Technologies  ISign Media

Modest diversification

The 3 months correlation between CHAR and ISign is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CHAR Technologies and iSign Media Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSign Media Solutions and CHAR Technologies 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 CHAR Technologies are associated (or correlated) with ISign Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSign Media Solutions has no effect on the direction of CHAR Technologies i.e., CHAR Technologies and ISign Media go up and down completely randomly.

Pair Corralation between CHAR Technologies and ISign Media

Assuming the 90 days horizon CHAR Technologies is expected to generate 5.31 times more return on investment than ISign Media. However, CHAR Technologies is 5.31 times more volatile than iSign Media Solutions. It trades about 0.02 of its potential returns per unit of risk. iSign Media Solutions is currently generating about -0.05 per unit of risk. If you would invest  17.00  in CHAR Technologies on September 29, 2024 and sell it today you would earn a total of  0.00  from holding CHAR Technologies or generate 0.0% return on investment over 90 days.

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

CHAR Technologies  vs.  iSign Media Solutions

CHAR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

iSign Media Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSign Media Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ISign Media is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CHAR Technologies and ISign Media

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

The idea behind CHAR Technologies and iSign Media Solutions 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.