Correlation Between Eastman Kodak and Innerscope Advertising

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Can any of the company-specific risk be diversified away by investing in both Eastman Kodak and Innerscope Advertising 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 Eastman Kodak and Innerscope Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Kodak Co and Innerscope Advertising Agency, you can compare the effects of market volatilities on Eastman Kodak and Innerscope Advertising 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 Eastman Kodak with a short position of Innerscope Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Kodak and Innerscope Advertising.

Diversification Opportunities for Eastman Kodak and Innerscope Advertising

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Eastman and Innerscope is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co and Innerscope Advertising Agency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innerscope Advertising and Eastman Kodak 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 Eastman Kodak Co are associated (or correlated) with Innerscope Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innerscope Advertising has no effect on the direction of Eastman Kodak i.e., Eastman Kodak and Innerscope Advertising go up and down completely randomly.

Pair Corralation between Eastman Kodak and Innerscope Advertising

Given the investment horizon of 90 days Eastman Kodak is expected to generate 13.73 times less return on investment than Innerscope Advertising. But when comparing it to its historical volatility, Eastman Kodak Co is 12.43 times less risky than Innerscope Advertising. It trades about 0.06 of its potential returns per unit of risk. Innerscope Advertising Agency is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,250  in Innerscope Advertising Agency on November 2, 2024 and sell it today you would lose (1,247) from holding Innerscope Advertising Agency or give up 99.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy99.2%
ValuesDaily Returns

Eastman Kodak Co  vs.  Innerscope Advertising Agency

 Performance 
       Timeline  
Eastman Kodak 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.
Innerscope Advertising 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Innerscope Advertising Agency has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Eastman Kodak and Innerscope Advertising Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eastman Kodak and Innerscope Advertising

The main advantage of trading using opposite Eastman Kodak and Innerscope Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Kodak position performs unexpectedly, Innerscope Advertising 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 Innerscope Advertising will offset losses from the drop in Innerscope Advertising's long position.
The idea behind Eastman Kodak Co and Innerscope Advertising Agency 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.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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