Correlation Between Ingentec and Silicon Integrated

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

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

Diversification Opportunities for Ingentec and Silicon Integrated

0.13

Correlation Coefficient

Ingentec  Silicon Integrated

Average diversification

The 3 months correlation between Ingentec and Silicon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and Silicon Integrated Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Integrated and Ingentec 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 Ingentec are associated (or correlated) with Silicon Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Integrated has no effect on the direction of Ingentec i.e., Ingentec and Silicon Integrated go up and down completely randomly.

Pair Corralation between Ingentec and Silicon Integrated

Assuming the 90 days trading horizon Ingentec is expected to under-perform the Silicon Integrated. But the stock apears to be less risky and, when comparing its historical volatility, Ingentec is 1.33 times less risky than Silicon Integrated. The stock trades about -0.38 of its potential returns per unit of risk. The Silicon Integrated Systems is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  7,120  in Silicon Integrated Systems on September 23, 2024 and sell it today you would lose (110.00) from holding Silicon Integrated Systems or give up 1.54% of portfolio value over 90 days.

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

Ingentec  vs.  Silicon Integrated Systems

Ingentec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingentec 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.

Silicon Integrated

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Integrated Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Silicon Integrated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ingentec and Silicon Integrated

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

The idea behind Ingentec and Silicon Integrated Systems 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.