Correlation Between Inventec Corp and Chicony Electronics
Can any of the company-specific risk be diversified away by investing in both Inventec Corp and Chicony Electronics 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 Inventec Corp and Chicony Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inventec Corp and Chicony Electronics Co, you can compare the effects of market volatilities on Inventec Corp and Chicony Electronics 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 Inventec Corp with a short position of Chicony Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inventec Corp and Chicony Electronics.
Diversification Opportunities for Inventec Corp and Chicony Electronics
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inventec and Chicony is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Inventec Corp and Chicony Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Electronics and Inventec Corp 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 Inventec Corp are associated (or correlated) with Chicony Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Electronics has no effect on the direction of Inventec Corp i.e., Inventec Corp and Chicony Electronics go up and down completely randomly.
Pair Corralation between Inventec Corp and Chicony Electronics
Assuming the 90 days trading horizon Inventec Corp is expected to under-perform the Chicony Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Inventec Corp is 1.41 times less risky than Chicony Electronics. The stock trades about -0.24 of its potential returns per unit of risk. The Chicony Electronics Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 15,250 in Chicony Electronics Co on November 4, 2024 and sell it today you would earn a total of 50.00 from holding Chicony Electronics Co or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inventec Corp vs. Chicony Electronics Co
Performance |
| Timeline |
| Inventec Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Chicony Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Inventec Corp and Chicony Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inventec Corp and Chicony Electronics
The main advantage of trading using opposite Inventec Corp and Chicony Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inventec Corp position performs unexpectedly, Chicony Electronics 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 Chicony Electronics will offset losses from the drop in Chicony Electronics' long position.The idea behind Inventec Corp and Chicony Electronics Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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