Correlation Between E Ink and Allied Circuit
Can any of the company-specific risk be diversified away by investing in both E Ink and Allied Circuit 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 Allied Circuit 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 Allied Circuit Co, you can compare the effects of market volatilities on E Ink and Allied Circuit 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 Allied Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Ink and Allied Circuit.
Diversification Opportunities for E Ink and Allied Circuit
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 8069 and Allied is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding E Ink Holdings and Allied Circuit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Circuit 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 Allied Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Circuit has no effect on the direction of E Ink i.e., E Ink and Allied Circuit go up and down completely randomly.
Pair Corralation between E Ink and Allied Circuit
Assuming the 90 days trading horizon E Ink Holdings is expected to generate 0.85 times more return on investment than Allied Circuit. However, E Ink Holdings is 1.17 times less risky than Allied Circuit. It trades about -0.15 of its potential returns per unit of risk. Allied Circuit Co is currently generating about -0.15 per unit of risk. If you would invest 29,050 in E Ink Holdings on January 16, 2025 and sell it today you would lose (5,150) from holding E Ink Holdings or give up 17.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Ink Holdings vs. Allied Circuit Co
Performance |
| Timeline |
| E Ink Holdings |
| Allied Circuit |
E Ink and Allied Circuit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Ink and Allied Circuit
The main advantage of trading using opposite E Ink and Allied Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Ink position performs unexpectedly, Allied Circuit 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 Allied Circuit will offset losses from the drop in Allied Circuit's long position.| E Ink vs. Hon Hai Precision | E Ink vs. Delta Electronics | E Ink vs. LARGAN Precision Co | E Ink vs. Yageo Corp |
| Allied Circuit vs. Hon Hai Precision | Allied Circuit vs. Delta Electronics | Allied Circuit vs. LARGAN Precision Co | Allied Circuit vs. E Ink 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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