Correlation Between EGalaxeMPIA Technology and Chipbond Technology

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

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

Diversification Opportunities for EGalaxeMPIA Technology and Chipbond Technology

0.23

Correlation Coefficient

EGalaxeMPIA Technology  Chipbond Technology

Modest diversification

The 3 months correlation between EGalaxeMPIA and Chipbond is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding eGalaxeMPIA Technology and Chipbond Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipbond Technology and EGalaxeMPIA Technology 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 eGalaxeMPIA Technology are associated (or correlated) with Chipbond Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipbond Technology has no effect on the direction of EGalaxeMPIA Technology i.e., EGalaxeMPIA Technology and Chipbond Technology go up and down completely randomly.

Pair Corralation between EGalaxeMPIA Technology and Chipbond Technology

Assuming the 90 days trading horizon eGalaxeMPIA Technology is expected to under-perform the Chipbond Technology. But the stock apears to be less risky and, when comparing its historical volatility, eGalaxeMPIA Technology is 1.55 times less risky than Chipbond Technology. The stock trades about -0.33 of its potential returns per unit of risk. The Chipbond Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,400  in Chipbond Technology on September 26, 2024 and sell it today you would earn a total of  10.00  from holding Chipbond Technology or generate 0.16% return on investment over 90 days.

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

eGalaxeMPIA Technology  vs.  Chipbond Technology

eGalaxeMPIA Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eGalaxeMPIA Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Chipbond Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EGalaxeMPIA Technology and Chipbond Technology

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

The idea behind eGalaxeMPIA Technology and Chipbond Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.