Correlation Between Innolux Corp and Global Brands

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

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

Diversification Opportunities for Innolux Corp and Global Brands

0.38

Correlation Coefficient

Innolux Corp  Global Brands

Weak diversification

The 3 months correlation between Innolux and Global is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Global Brands Manufacture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Brands Manufacture 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 Global Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Brands Manufacture has no effect on the direction of Innolux Corp i.e., Innolux Corp and Global Brands go up and down completely randomly.

Pair Corralation between Innolux Corp and Global Brands

Assuming the 90 days trading horizon Innolux Corp is expected to generate 1.49 times less return on investment than Global Brands. In addition to that, Innolux Corp is 1.1 times more volatile than Global Brands Manufacture. It trades about 0.05 of its total potential returns per unit of risk. Global Brands Manufacture is currently generating about 0.07 per unit of volatility. If you would invest  2,805  in Global Brands Manufacture on September 14, 2024 and sell it today you would earn a total of  2,485  from holding Global Brands Manufacture or generate 88.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Innolux Corp  vs.  Global Brands Manufacture

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.

Global Brands Manufacture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Brands Manufacture 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 Global Brands

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

The idea behind Innolux Corp and Global Brands Manufacture 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.