Correlation Between Ingentec and AV Tech

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

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

Diversification Opportunities for Ingentec and AV Tech

0.62

Correlation Coefficient

Ingentec  AV Tech

Poor diversification

The 3 months correlation between Ingentec and 8072 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and AV Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AV Tech Corp 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 AV Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AV Tech Corp has no effect on the direction of Ingentec i.e., Ingentec and AV Tech go up and down completely randomly.

Pair Corralation between Ingentec and AV Tech

Assuming the 90 days trading horizon Ingentec is expected to under-perform the AV Tech. In addition to that, Ingentec is 1.62 times more volatile than AV Tech Corp. It trades about -0.38 of its total potential returns per unit of risk. AV Tech Corp is currently generating about -0.53 per unit of volatility. If you would invest  2,735  in AV Tech Corp on September 23, 2024 and sell it today you would lose (310.00) from holding AV Tech Corp or give up 11.33% of portfolio value over 90 days.

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

Ingentec  vs.  AV Tech Corp

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.

AV Tech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AV Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ingentec and AV Tech

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

The idea behind Ingentec and AV Tech Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.