Correlation Between Ingentec and Lotes

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

By analyzing existing cross correlation between Ingentec and Lotes Co, you can compare the effects of market volatilities on Ingentec and Lotes 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 Lotes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingentec and Lotes.

Diversification Opportunities for Ingentec and Lotes

-0.67

Correlation Coefficient

Ingentec  Lotes

Excellent diversification

The 3 months correlation between Ingentec and Lotes is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and Lotes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotes 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 Lotes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotes has no effect on the direction of Ingentec i.e., Ingentec and Lotes go up and down completely randomly.

Pair Corralation between Ingentec and Lotes

Assuming the 90 days trading horizon Ingentec is expected to under-perform the Lotes. But the stock apears to be less risky and, when comparing its historical volatility, Ingentec is 1.23 times less risky than Lotes. The stock trades about -0.21 of its potential returns per unit of risk. The Lotes Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  167,000  in Lotes Co on October 13, 2024 and sell it today you would earn a total of  14,000  from holding Lotes Co or generate 8.38% return on investment over 90 days.

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

Ingentec  vs.  Lotes Co

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 weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lotes

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lotes Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lotes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ingentec and Lotes

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

The idea behind Ingentec and Lotes Co 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.