Correlation Between Innometry and Ecopro BM
Can any of the company-specific risk be diversified away by investing in both Innometry and Ecopro BM 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 Innometry and Ecopro BM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innometry Co and Ecopro BM Co, you can compare the effects of market volatilities on Innometry and Ecopro BM 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 Innometry with a short position of Ecopro BM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innometry and Ecopro BM.
Diversification Opportunities for Innometry and Ecopro BM
Poor diversification
The 3 months correlation between Innometry and Ecopro is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Innometry Co and Ecopro BM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro BM and Innometry 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 Innometry Co are associated (or correlated) with Ecopro BM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro BM has no effect on the direction of Innometry i.e., Innometry and Ecopro BM go up and down completely randomly.
Pair Corralation between Innometry and Ecopro BM
Assuming the 90 days trading horizon Innometry Co is expected to generate 0.62 times more return on investment than Ecopro BM. However, Innometry Co is 1.62 times less risky than Ecopro BM. It trades about -0.21 of its potential returns per unit of risk. Ecopro BM Co is currently generating about -0.16 per unit of risk. If you would invest 1,016,000 in Innometry Co on August 29, 2024 and sell it today you would lose (191,000) from holding Innometry Co or give up 18.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innometry Co vs. Ecopro BM Co
Performance |
| Timeline |
| Innometry |
| Ecopro BM |
Innometry and Ecopro BM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innometry and Ecopro BM
The main advantage of trading using opposite Innometry and Ecopro BM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innometry position performs unexpectedly, Ecopro BM 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 Ecopro BM will offset losses from the drop in Ecopro BM's long position.| Innometry vs. Daejoo Electronic Materials | Innometry vs. Parksystems Corp | Innometry vs. BH Co | Innometry vs. Partron 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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