Correlation Between IEI Integration and NEXCOM International
Can any of the company-specific risk be diversified away by investing in both IEI Integration and NEXCOM International 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 IEI Integration and NEXCOM International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IEI Integration Corp and NEXCOM International Co, you can compare the effects of market volatilities on IEI Integration and NEXCOM International 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 IEI Integration with a short position of NEXCOM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IEI Integration and NEXCOM International.
Diversification Opportunities for IEI Integration and NEXCOM International
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IEI and NEXCOM is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding IEI Integration Corp and NEXCOM International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXCOM International and IEI Integration 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 IEI Integration Corp are associated (or correlated) with NEXCOM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXCOM International has no effect on the direction of IEI Integration i.e., IEI Integration and NEXCOM International go up and down completely randomly.
Pair Corralation between IEI Integration and NEXCOM International
Assuming the 90 days trading horizon IEI Integration is expected to generate 12.58 times less return on investment than NEXCOM International. But when comparing it to its historical volatility, IEI Integration Corp is 1.44 times less risky than NEXCOM International. It trades about 0.01 of its potential returns per unit of risk. NEXCOM International Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,540 in NEXCOM International Co on August 31, 2024 and sell it today you would earn a total of 1,435 from holding NEXCOM International Co or generate 40.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
IEI Integration Corp vs. NEXCOM International Co
Performance |
| Timeline |
| IEI Integration Corp |
| NEXCOM International |
IEI Integration and NEXCOM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IEI Integration and NEXCOM International
The main advantage of trading using opposite IEI Integration and NEXCOM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IEI Integration position performs unexpectedly, NEXCOM International 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 NEXCOM International will offset losses from the drop in NEXCOM International's long position.| IEI Integration vs. United Microelectronics | IEI Integration vs. Winbond Electronics Corp | IEI Integration vs. Macronix International Co |
| NEXCOM International vs. Cal Comp Electronics Public | NEXCOM International vs. Catcher Technology Co | NEXCOM International vs. Darfon Electronics Corp | NEXCOM International vs. Digital China Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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