Correlation Between Salfacorp and Ingevec

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

Diversification Opportunities for Salfacorp and Ingevec

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Salfacorp and Ingevec is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Salfacorp and Ingevec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevec and Salfacorp 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 Salfacorp are associated (or correlated) with Ingevec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingevec has no effect on the direction of Salfacorp i.e., Salfacorp and Ingevec go up and down completely randomly.

Pair Corralation between Salfacorp and Ingevec

Assuming the 90 days trading horizon Salfacorp is expected to generate 0.97 times more return on investment than Ingevec. However, Salfacorp is 1.03 times less risky than Ingevec. It trades about 0.03 of its potential returns per unit of risk. Ingevec is currently generating about -0.31 per unit of risk. If you would invest  55,532  in Salfacorp on September 20, 2024 and sell it today you would earn a total of  252.00  from holding Salfacorp or generate 0.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy68.18%
ValuesDaily Returns

Salfacorp  vs.  Ingevec

 Performance 
       Timeline  
Salfacorp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Salfacorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Salfacorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Ingevec 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ingevec are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Ingevec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Salfacorp and Ingevec Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salfacorp and Ingevec

The main advantage of trading using opposite Salfacorp and Ingevec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salfacorp position performs unexpectedly, Ingevec 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 Ingevec will offset losses from the drop in Ingevec's long position.
The idea behind Salfacorp and Ingevec 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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