Correlation Between E Ink and Excellence Optoelectronic
Can any of the company-specific risk be diversified away by investing in both E Ink and Excellence Optoelectronic 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 E Ink and Excellence Optoelectronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Ink Holdings and Excellence Optoelectronic, you can compare the effects of market volatilities on E Ink and Excellence Optoelectronic 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 E Ink with a short position of Excellence Optoelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Ink and Excellence Optoelectronic.
Diversification Opportunities for E Ink and Excellence Optoelectronic
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 8069 and Excellence is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding E Ink Holdings and Excellence Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellence Optoelectronic and E Ink 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 E Ink Holdings are associated (or correlated) with Excellence Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellence Optoelectronic has no effect on the direction of E Ink i.e., E Ink and Excellence Optoelectronic go up and down completely randomly.
Pair Corralation between E Ink and Excellence Optoelectronic
Assuming the 90 days trading horizon E Ink Holdings is expected to under-perform the Excellence Optoelectronic. But the stock apears to be less risky and, when comparing its historical volatility, E Ink Holdings is 1.73 times less risky than Excellence Optoelectronic. The stock trades about -0.1 of its potential returns per unit of risk. The Excellence Optoelectronic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,915 in Excellence Optoelectronic on August 30, 2024 and sell it today you would earn a total of 80.00 from holding Excellence Optoelectronic or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Ink Holdings vs. Excellence Optoelectronic
Performance |
| Timeline |
| E Ink Holdings |
| Excellence Optoelectronic |
E Ink and Excellence Optoelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Ink and Excellence Optoelectronic
The main advantage of trading using opposite E Ink and Excellence Optoelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Ink position performs unexpectedly, Excellence Optoelectronic 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 Excellence Optoelectronic will offset losses from the drop in Excellence Optoelectronic's long position.| E Ink vs. Unimicron Technology Corp | E Ink vs. Innolux Corp | E Ink vs. Delta Electronics | E Ink vs. Novatek Microelectronics Corp |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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