Correlation Between Orea Mining and Icon Longshort

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

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

Diversification Opportunities for Orea Mining and Icon Longshort

0.4

Correlation Coefficient

Orea Mining  Icon Longshort

Very weak diversification

The 3 months correlation between Orea and Icon is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Orea Mining Corp and Icon Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Longshort and Orea Mining 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 Orea Mining Corp are associated (or correlated) with Icon Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Longshort has no effect on the direction of Orea Mining i.e., Orea Mining and Icon Longshort go up and down completely randomly.

Pair Corralation between Orea Mining and Icon Longshort

Assuming the 90 days horizon Orea Mining Corp is expected to under-perform the Icon Longshort. In addition to that, Orea Mining is 24.8 times more volatile than Icon Longshort Fund. It trades about -0.24 of its total potential returns per unit of risk. Icon Longshort Fund is currently generating about -0.21 per unit of volatility. If you would invest  2,651  in Icon Longshort Fund on January 19, 2024 and sell it today you would lose (107.00) from holding Icon Longshort Fund or give up 4.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Orea Mining Corp  vs.  Icon Longshort Fund

Orea Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Icon Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Icon Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Orea Mining and Icon Longshort

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

The idea behind Orea Mining Corp and Icon Longshort Fund 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 Transaction History module to view history of all your transactions and understand their impact on performance.