Correlation Between Ingentec and AzureWave Technologies

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

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

Diversification Opportunities for Ingentec and AzureWave Technologies

-0.5

Correlation Coefficient

Ingentec  AzureWave Technologies

Very good diversification

The 3 months correlation between Ingentec and AzureWave is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and AzureWave Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AzureWave Technologies 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 AzureWave Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AzureWave Technologies has no effect on the direction of Ingentec i.e., Ingentec and AzureWave Technologies go up and down completely randomly.

Pair Corralation between Ingentec and AzureWave Technologies

Assuming the 90 days trading horizon Ingentec is expected to under-perform the AzureWave Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Ingentec is 3.04 times less risky than AzureWave Technologies. The stock trades about -0.38 of its potential returns per unit of risk. The AzureWave Technologies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,360  in AzureWave Technologies on September 23, 2024 and sell it today you would earn a total of  750.00  from holding AzureWave Technologies or generate 17.2% return on investment over 90 days.

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

Ingentec  vs.  AzureWave Technologies

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.

AzureWave Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AzureWave Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AzureWave Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingentec and AzureWave Technologies

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

The idea behind Ingentec and AzureWave Technologies 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.