Correlation Between Emerging Display and E Ink

Can any of the company-specific risk be diversified away by investing in both Emerging Display and E Ink 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 Emerging Display and E Ink into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Emerging Display Technologies and E Ink Holdings, you can compare the effects of market volatilities on Emerging Display and E Ink 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 Emerging Display with a short position of E Ink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Display and E Ink.

Diversification Opportunities for Emerging Display and E Ink

0.49

Correlation Coefficient

Emerging Display  E Ink

Very weak diversification

The 3 months correlation between Emerging and 8069 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Display Technologies and E Ink Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Ink Holdings and Emerging Display 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 Emerging Display Technologies are associated (or correlated) with E Ink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Ink Holdings has no effect on the direction of Emerging Display i.e., Emerging Display and E Ink go up and down completely randomly.

Pair Corralation between Emerging Display and E Ink

Assuming the 90 days trading horizon Emerging Display Technologies is expected to under-perform the E Ink. But the stock apears to be less risky and, when comparing its historical volatility, Emerging Display Technologies is 1.71 times less risky than E Ink. The stock trades about -0.05 of its potential returns per unit of risk. The E Ink Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  27,050  in E Ink Holdings on December 30, 2024 and sell it today you would earn a total of  1,100  from holding E Ink Holdings or generate 4.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Emerging Display Technologies  vs.  E Ink Holdings

Emerging Display Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emerging Display Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Emerging Display is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

E Ink Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in E Ink Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, E Ink may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Emerging Display and E Ink

The main advantage of trading using opposite Emerging Display and E Ink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Display position performs unexpectedly, E Ink 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 E Ink will offset losses from the drop in E Ink's long position.

The idea behind Emerging Display Technologies and E Ink Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.