Correlation Between Illuvium and PING

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

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

Diversification Opportunities for Illuvium and PING

-0.28

Correlation Coefficient

Illuvium  PING

Very good diversification

The 3 months correlation between Illuvium and PING is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Illuvium and PING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PING and Illuvium 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 Illuvium are associated (or correlated) with PING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PING has no effect on the direction of Illuvium i.e., Illuvium and PING go up and down completely randomly.

Pair Corralation between Illuvium and PING

Assuming the 90 days trading horizon Illuvium is expected to generate 5.05 times less return on investment than PING. But when comparing it to its historical volatility, Illuvium is 3.63 times less risky than PING. It trades about 0.07 of its potential returns per unit of risk. PING is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5.46  in PING on January 20, 2024 and sell it today you would earn a total of  10.54  from holding PING or generate 193.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.19%
Values	Daily Returns

Illuvium  vs.  PING

Illuvium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Illuvium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Illuvium exhibited solid returns over the last few months and may actually be approaching a breakup point.

PING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PING is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Illuvium and PING

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

The idea behind Illuvium and PING 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.