Correlation Between Newretail and Ingentec
Can any of the company-specific risk be diversified away by investing in both Newretail 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 Newretail and Ingentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Ingentec, you can compare the effects of market volatilities on Newretail 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 Newretail with a short position of Ingentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Ingentec.
Diversification Opportunities for Newretail and Ingentec
Excellent diversification
The 3 months correlation between Newretail and Ingentec is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec and Newretail 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 Newretail 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 Newretail i.e., Newretail and Ingentec go up and down completely randomly.
Pair Corralation between Newretail and Ingentec
Assuming the 90 days trading horizon Newretail Co is expected to generate 1.8 times more return on investment than Ingentec. However, Newretail is 1.8 times more volatile than Ingentec. It trades about 0.09 of its potential returns per unit of risk. Ingentec is currently generating about -0.12 per unit of risk. If you would invest 1,990 in Newretail Co on October 31, 2024 and sell it today you would earn a total of 330.00 from holding Newretail Co or generate 16.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Newretail Co vs. Ingentec
Performance |
Timeline |
Newretail |
Ingentec |
Newretail and Ingentec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Newretail and Ingentec
The main advantage of trading using opposite Newretail and Ingentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail 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.Newretail vs. Formosa Chemicals Fibre | ||
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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