Correlation Between Standard Foods and Ingentec
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Ingentec 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 Standard Foods and Ingentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Ingentec, you can compare the effects of market volatilities on Standard Foods and Ingentec 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 Standard Foods with a short position of Ingentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Ingentec.
Diversification Opportunities for Standard Foods and Ingentec
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Ingentec is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Ingentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingentec has no effect on the direction of Standard Foods i.e., Standard Foods and Ingentec go up and down completely randomly.
Pair Corralation between Standard Foods and Ingentec
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the Ingentec. But the stock apears to be less risky and, when comparing its historical volatility, Standard Foods Corp is 3.16 times less risky than Ingentec. The stock trades about -0.14 of its potential returns per unit of risk. The Ingentec is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 21,835 in Ingentec on September 22, 2024 and sell it today you would lose (4,335) from holding Ingentec or give up 19.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Ingentec
Performance |
| Timeline |
| Standard Foods Corp |
| Ingentec |
Standard Foods and Ingentec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Ingentec
The main advantage of trading using opposite Standard Foods and Ingentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Ingentec 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 Ingentec will offset losses from the drop in Ingentec's long position.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
| Ingentec vs. Chung Hwa Food | Ingentec vs. Standard Foods Corp | Ingentec vs. WT Microelectronics Co | Ingentec vs. Lien Chang Electronic |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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