Correlation Between Ingentec and WPG Holdings

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

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

Diversification Opportunities for Ingentec and WPG Holdings

0.85

Correlation Coefficient

Ingentec  WPG Holdings

Very poor diversification

The 3 months correlation between Ingentec and WPG is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings 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 WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of Ingentec i.e., Ingentec and WPG Holdings go up and down completely randomly.

Pair Corralation between Ingentec and WPG Holdings

Assuming the 90 days trading horizon Ingentec is expected to under-perform the WPG Holdings. In addition to that, Ingentec is 1.37 times more volatile than WPG Holdings. It trades about -0.19 of its total potential returns per unit of risk. WPG Holdings is currently generating about -0.06 per unit of volatility. If you would invest  7,500  in WPG Holdings on September 29, 2024 and sell it today you would lose (470.00) from holding WPG Holdings or give up 6.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Ingentec  vs.  WPG Holdings

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.

WPG Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WPG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, WPG Holdings 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 Ingentec and WPG Holdings

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

The idea behind Ingentec and WPG Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.