Correlation Between Ingentec and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Ingentec and Lien Chang 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 Ingentec and Lien Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingentec and Lien Chang Electronic, you can compare the effects of market volatilities on Ingentec and Lien Chang 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 Ingentec with a short position of Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingentec and Lien Chang.
Diversification Opportunities for Ingentec and Lien Chang
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ingentec and Lien is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and Lien Chang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Chang Electronic and Ingentec 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 Ingentec are associated (or correlated) with Lien Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Chang Electronic has no effect on the direction of Ingentec i.e., Ingentec and Lien Chang go up and down completely randomly.
Pair Corralation between Ingentec and Lien Chang
Assuming the 90 days trading horizon Ingentec is expected to generate 0.66 times more return on investment than Lien Chang. However, Ingentec is 1.52 times less risky than Lien Chang. It trades about -0.32 of its potential returns per unit of risk. Lien Chang Electronic is currently generating about -0.4 per unit of risk. If you would invest 19,850 in Ingentec on September 22, 2024 and sell it today you would lose (2,350) from holding Ingentec or give up 11.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingentec vs. Lien Chang Electronic
Performance |
| Timeline |
| Ingentec |
| Lien Chang Electronic |
Ingentec and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingentec and Lien Chang
The main advantage of trading using opposite Ingentec and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingentec position performs unexpectedly, Lien Chang 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 Lien Chang will offset losses from the drop in Lien Chang's long position.| Ingentec vs. Chung Hwa Food | Ingentec vs. Standard Foods Corp | Ingentec vs. WT Microelectronics Co | Ingentec vs. Lien Chang Electronic |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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