Correlation Between Taita Chemical and Ingentec
Can any of the company-specific risk be diversified away by investing in both Taita Chemical and Ingentec 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 Taita Chemical and Ingentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taita Chemical Co and Ingentec, you can compare the effects of market volatilities on Taita Chemical and Ingentec 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 Taita Chemical with a short position of Ingentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taita Chemical and Ingentec.
Diversification Opportunities for Taita Chemical and Ingentec
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Taita and Ingentec is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Taita Chemical Co and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec and Taita Chemical 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 Taita Chemical Co are associated (or correlated) with Ingentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingentec has no effect on the direction of Taita Chemical i.e., Taita Chemical and Ingentec go up and down completely randomly.
Pair Corralation between Taita Chemical and Ingentec
Assuming the 90 days trading horizon Taita Chemical Co is expected to generate 0.88 times more return on investment than Ingentec. However, Taita Chemical Co is 1.13 times less risky than Ingentec. It trades about -0.01 of its potential returns per unit of risk. Ingentec is currently generating about -0.05 per unit of risk. If you would invest 1,560 in Taita Chemical Co on September 24, 2024 and sell it today you would lose (120.00) from holding Taita Chemical Co or give up 7.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Taita Chemical Co vs. Ingentec
Performance |
Timeline |
Taita Chemical |
Ingentec |
Taita Chemical and Ingentec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Taita Chemical and Ingentec
The main advantage of trading using opposite Taita Chemical and Ingentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taita Chemical position performs unexpectedly, Ingentec 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 Ingentec will offset losses from the drop in Ingentec's long position.Taita Chemical vs. China General Plastics | Taita Chemical vs. Asia Polymer Corp | Taita Chemical vs. USI Corp | Taita Chemical vs. Grand Pacific Petrochemical |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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