Correlation Between Innolux Corp and GeoVision

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

By analyzing existing cross correlation between Innolux Corp and GeoVision, you can compare the effects of market volatilities on Innolux Corp and GeoVision 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 Innolux Corp with a short position of GeoVision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and GeoVision.

Diversification Opportunities for Innolux Corp and GeoVision

0.31

Correlation Coefficient

Innolux Corp  GeoVision

Weak diversification

The 3 months correlation between Innolux and GeoVision is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and GeoVision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVision and Innolux Corp 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 Innolux Corp are associated (or correlated) with GeoVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVision has no effect on the direction of Innolux Corp i.e., Innolux Corp and GeoVision go up and down completely randomly.

Pair Corralation between Innolux Corp and GeoVision

Assuming the 90 days trading horizon Innolux Corp is expected to generate 0.71 times more return on investment than GeoVision. However, Innolux Corp is 1.41 times less risky than GeoVision. It trades about 0.02 of its potential returns per unit of risk. GeoVision is currently generating about -0.04 per unit of risk. If you would invest  1,550  in Innolux Corp on September 14, 2024 and sell it today you would earn a total of  25.00  from holding Innolux Corp or generate 1.61% return on investment over 90 days.

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

Innolux Corp  vs.  GeoVision

Innolux Corp

Risk-Adjusted Performance

1 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innolux Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Innolux Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GeoVision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GeoVision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Innolux Corp and GeoVision

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

The idea behind Innolux Corp and GeoVision 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.