Correlation Between E Ink and New Advanced

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

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

Diversification Opportunities for E Ink and New Advanced

0.36

Correlation Coefficient

E Ink  New Advanced

Weak diversification

The 3 months correlation between 8069 and New is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding E Ink Holdings and New Advanced Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Advanced Electronics and E Ink 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 E Ink Holdings are associated (or correlated) with New Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Advanced Electronics has no effect on the direction of E Ink i.e., E Ink and New Advanced go up and down completely randomly.

Pair Corralation between E Ink and New Advanced

Assuming the 90 days trading horizon E Ink is expected to generate 1.54 times less return on investment than New Advanced. In addition to that, E Ink is 1.16 times more volatile than New Advanced Electronics. It trades about 0.04 of its total potential returns per unit of risk. New Advanced Electronics is currently generating about 0.07 per unit of volatility. If you would invest  5,330  in New Advanced Electronics on December 29, 2024 and sell it today you would earn a total of  430.00  from holding New Advanced Electronics or generate 8.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.25%
Values	Daily Returns

E Ink Holdings  vs.  New Advanced Electronics

E Ink Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in E Ink Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, E Ink may actually be approaching a critical reversion point that can send shares even higher in April 2025.

New Advanced Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Advanced Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Advanced may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with E Ink and New Advanced

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

The idea behind E Ink Holdings and New Advanced Electronics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.