Correlation Between Pegatron Corp and E Ink

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

By analyzing existing cross correlation between Pegatron Corp and E Ink Holdings, you can compare the effects of market volatilities on Pegatron Corp and E Ink 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 Pegatron Corp with a short position of E Ink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pegatron Corp and E Ink.

Diversification Opportunities for Pegatron Corp and E Ink

0.74

Correlation Coefficient

Pegatron Corp  E Ink

Poor diversification

The 3 months correlation between Pegatron and 8069 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pegatron Corp and E Ink Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Ink Holdings and Pegatron Corp 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 Pegatron Corp are associated (or correlated) with E Ink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Ink Holdings has no effect on the direction of Pegatron Corp i.e., Pegatron Corp and E Ink go up and down completely randomly.

Pair Corralation between Pegatron Corp and E Ink

Assuming the 90 days trading horizon Pegatron Corp is expected to generate 1.39 times less return on investment than E Ink. But when comparing it to its historical volatility, Pegatron Corp is 1.53 times less risky than E Ink. It trades about 0.06 of its potential returns per unit of risk. E Ink Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  17,204  in E Ink Holdings on October 23, 2024 and sell it today you would earn a total of  10,296  from holding E Ink Holdings or generate 59.85% return on investment over 90 days.

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

Pegatron Corp  vs.  E Ink Holdings

Pegatron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pegatron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

E Ink Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Ink Holdings 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 Pegatron Corp and E Ink

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

The idea behind Pegatron Corp and E Ink 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.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.