Correlation Between Eternal Materials and Ingentec
Can any of the company-specific risk be diversified away by investing in both Eternal Materials 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 Eternal Materials and Ingentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Ingentec, you can compare the effects of market volatilities on Eternal Materials 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 Eternal Materials with a short position of Ingentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Ingentec.
Diversification Opportunities for Eternal Materials and Ingentec
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eternal and Ingentec is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec and Eternal Materials 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 Eternal Materials Co 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 Eternal Materials i.e., Eternal Materials and Ingentec go up and down completely randomly.
Pair Corralation between Eternal Materials and Ingentec
Assuming the 90 days trading horizon Eternal Materials Co is expected to under-perform the Ingentec. But the stock apears to be less risky and, when comparing its historical volatility, Eternal Materials Co is 2.29 times less risky than Ingentec. The stock trades about -0.01 of its potential returns per unit of risk. The Ingentec is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17,846 in Ingentec on August 26, 2024 and sell it today you would earn a total of 2,304 from holding Ingentec or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Eternal Materials Co vs. Ingentec
Performance |
| Timeline |
| Eternal Materials |
| Ingentec |
Eternal Materials and Ingentec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Ingentec
The main advantage of trading using opposite Eternal Materials and Ingentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials 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.| Eternal Materials vs. Cheng Shin Rubber | Eternal Materials vs. Taiwan Cement Corp | Eternal Materials vs. China Steel Chemical | Eternal Materials vs. Yulon Motor Co |
| Ingentec vs. Arbor Technology | Ingentec vs. United Radiant Technology | Ingentec vs. WINSON Machinery Co | Ingentec vs. New Asia Construction |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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