Correlation Between INNOX Advanced and Solus Advanced
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and Solus Advanced 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 INNOX Advanced and Solus Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and Solus Advanced Materials, you can compare the effects of market volatilities on INNOX Advanced and Solus Advanced 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 INNOX Advanced with a short position of Solus Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and Solus Advanced.
Diversification Opportunities for INNOX Advanced and Solus Advanced
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INNOX and Solus is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Solus Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solus Advanced Materials and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with Solus Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solus Advanced Materials has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and Solus Advanced go up and down completely randomly.
Pair Corralation between INNOX Advanced and Solus Advanced
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 0.71 times more return on investment than Solus Advanced. However, INNOX Advanced Materials is 1.4 times less risky than Solus Advanced. It trades about 0.01 of its potential returns per unit of risk. Solus Advanced Materials is currently generating about -0.02 per unit of risk. If you would invest 2,984,735 in INNOX Advanced Materials on October 27, 2024 and sell it today you would lose (209,735) from holding INNOX Advanced Materials or give up 7.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. Solus Advanced Materials
Performance |
| Timeline |
| INNOX Advanced Materials |
| Solus Advanced Materials |
INNOX Advanced and Solus Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and Solus Advanced
The main advantage of trading using opposite INNOX Advanced and Solus Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, Solus Advanced 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 Solus Advanced will offset losses from the drop in Solus Advanced's long position.| INNOX Advanced vs. Ssangyong Information Communication | INNOX Advanced vs. Iljin Display | INNOX Advanced vs. Daejung Chemicals Metals | INNOX Advanced vs. Kbi Metal Co |
| Solus Advanced vs. Solution Advanced Technology | Solus Advanced vs. Dongwoon Anatech Co | Solus Advanced vs. Raontech | Solus Advanced vs. NewFlex Technology Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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