Correlation Between Elitegroup Computer and Ingentec
Can any of the company-specific risk be diversified away by investing in both Elitegroup Computer 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 Elitegroup Computer and Ingentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elitegroup Computer Systems and Ingentec, you can compare the effects of market volatilities on Elitegroup Computer 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 Elitegroup Computer with a short position of Ingentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elitegroup Computer and Ingentec.
Diversification Opportunities for Elitegroup Computer and Ingentec
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elitegroup and Ingentec is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Elitegroup Computer Systems and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec and Elitegroup Computer 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 Elitegroup Computer Systems 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 Elitegroup Computer i.e., Elitegroup Computer and Ingentec go up and down completely randomly.
Pair Corralation between Elitegroup Computer and Ingentec
Assuming the 90 days trading horizon Elitegroup Computer is expected to generate 2.43 times less return on investment than Ingentec. But when comparing it to its historical volatility, Elitegroup Computer Systems is 1.01 times less risky than Ingentec. It trades about 0.08 of its potential returns per unit of risk. Ingentec is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 17,150 in Ingentec on November 4, 2024 and sell it today you would earn a total of 950.00 from holding Ingentec or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elitegroup Computer Systems vs. Ingentec
Performance |
| Timeline |
| Elitegroup Computer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ingentec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Elitegroup Computer and Ingentec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elitegroup Computer and Ingentec
The main advantage of trading using opposite Elitegroup Computer and Ingentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elitegroup Computer 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.The idea behind Elitegroup Computer Systems and Ingentec 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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