Correlation Between Ideanomics and S4 Capital

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Can any of the company-specific risk be diversified away by investing in both Ideanomics and S4 Capital 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 Ideanomics and S4 Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ideanomics and S4 Capital Plc, you can compare the effects of market volatilities on Ideanomics and S4 Capital 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 Ideanomics with a short position of S4 Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ideanomics and S4 Capital.

Diversification Opportunities for Ideanomics and S4 Capital

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ideanomics and SCPPF is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ideanomics and S4 Capital Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S4 Capital Plc and Ideanomics 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 Ideanomics are associated (or correlated) with S4 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S4 Capital Plc has no effect on the direction of Ideanomics i.e., Ideanomics and S4 Capital go up and down completely randomly.

Pair Corralation between Ideanomics and S4 Capital

Given the investment horizon of 90 days Ideanomics is expected to generate 2.83 times more return on investment than S4 Capital. However, Ideanomics is 2.83 times more volatile than S4 Capital Plc. It trades about 0.04 of its potential returns per unit of risk. S4 Capital Plc is currently generating about 0.06 per unit of risk. If you would invest  101.00  in Ideanomics on December 29, 2023 and sell it today you would lose (6.00) from holding Ideanomics or give up 5.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ideanomics  vs.  S4 Capital Plc

 Performance 
       Timeline  
Ideanomics 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Ideanomics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
S4 Capital Plc 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days S4 Capital Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ideanomics and S4 Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ideanomics and S4 Capital

The main advantage of trading using opposite Ideanomics and S4 Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ideanomics position performs unexpectedly, S4 Capital 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 S4 Capital will offset losses from the drop in S4 Capital's long position.
The idea behind Ideanomics and S4 Capital Plc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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