Correlation Between INEO Tech and Cheer Holding
Can any of the company-specific risk be diversified away by investing in both INEO Tech and Cheer Holding 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 INEO Tech and Cheer Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INEO Tech Corp and Cheer Holding, you can compare the effects of market volatilities on INEO Tech and Cheer Holding 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 INEO Tech with a short position of Cheer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of INEO Tech and Cheer Holding.
Diversification Opportunities for INEO Tech and Cheer Holding
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INEO and Cheer is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding INEO Tech Corp and Cheer Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheer Holding and INEO Tech 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 INEO Tech Corp are associated (or correlated) with Cheer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheer Holding has no effect on the direction of INEO Tech i.e., INEO Tech and Cheer Holding go up and down completely randomly.
Pair Corralation between INEO Tech and Cheer Holding
Assuming the 90 days horizon INEO Tech Corp is expected to under-perform the Cheer Holding. In addition to that, INEO Tech is 2.24 times more volatile than Cheer Holding. It trades about -0.18 of its total potential returns per unit of risk. Cheer Holding is currently generating about -0.01 per unit of volatility. If you would invest 255.00 in Cheer Holding on August 26, 2024 and sell it today you would lose (10.00) from holding Cheer Holding or give up 3.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INEO Tech Corp vs. Cheer Holding
Performance |
| Timeline |
| INEO Tech Corp |
| Cheer Holding |
INEO Tech and Cheer Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INEO Tech and Cheer Holding
The main advantage of trading using opposite INEO Tech and Cheer Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INEO Tech position performs unexpectedly, Cheer Holding 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 Cheer Holding will offset losses from the drop in Cheer Holding's long position.The idea behind INEO Tech Corp and Cheer Holding 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.| Cheer Holding vs. Mirriad Advertising plc | Cheer Holding vs. INEO Tech Corp | Cheer Holding vs. Innovid Corp | Cheer Holding vs. Townsquare Media |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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