Correlation Between Intchains Group and Enphase Energy
Can any of the company-specific risk be diversified away by investing in both Intchains Group and Enphase Energy 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 Intchains Group and Enphase Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intchains Group Limited and Enphase Energy, you can compare the effects of market volatilities on Intchains Group and Enphase Energy 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 Intchains Group with a short position of Enphase Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intchains Group and Enphase Energy.
Diversification Opportunities for Intchains Group and Enphase Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intchains and Enphase is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Intchains Group Limited and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and Intchains Group 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 Intchains Group Limited are associated (or correlated) with Enphase Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enphase Energy has no effect on the direction of Intchains Group i.e., Intchains Group and Enphase Energy go up and down completely randomly.
Pair Corralation between Intchains Group and Enphase Energy
Considering the 90-day investment horizon Intchains Group Limited is expected to generate 1.57 times more return on investment than Enphase Energy. However, Intchains Group is 1.57 times more volatile than Enphase Energy. It trades about -0.05 of its potential returns per unit of risk. Enphase Energy is currently generating about -0.11 per unit of risk. If you would invest 849.00 in Intchains Group Limited on August 26, 2024 and sell it today you would lose (421.00) from holding Intchains Group Limited or give up 49.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intchains Group Limited vs. Enphase Energy
Performance |
| Timeline |
| Intchains Group |
| Enphase Energy |
Intchains Group and Enphase Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intchains Group and Enphase Energy
The main advantage of trading using opposite Intchains Group and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intchains Group position performs unexpectedly, Enphase Energy 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 Enphase Energy will offset losses from the drop in Enphase Energy's long position.The idea behind Intchains Group Limited and Enphase Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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