Correlation Between E Ink and Plastron Precision

Can any of the company-specific risk be diversified away by investing in both E Ink and Plastron Precision 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 Plastron Precision 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 Plastron Precision Co, you can compare the effects of market volatilities on E Ink and Plastron Precision 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 Plastron Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Ink and Plastron Precision.

Diversification Opportunities for E Ink and Plastron Precision

0.63

Correlation Coefficient

E Ink  Plastron Precision

Poor diversification

The 3 months correlation between 8069 and Plastron is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding E Ink Holdings and Plastron Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastron Precision 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 Plastron Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastron Precision has no effect on the direction of E Ink i.e., E Ink and Plastron Precision go up and down completely randomly.

Pair Corralation between E Ink and Plastron Precision

Assuming the 90 days trading horizon E Ink Holdings is expected to generate 2.6 times more return on investment than Plastron Precision. However, E Ink is 2.6 times more volatile than Plastron Precision Co. It trades about 0.06 of its potential returns per unit of risk. Plastron Precision Co is currently generating about 0.04 per unit of risk. If you would invest  26,800  in E Ink Holdings on October 9, 2024 and sell it today you would earn a total of  650.00  from holding E Ink Holdings or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

E Ink Holdings  vs.  Plastron Precision Co

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.

Plastron Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plastron Precision Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Plastron Precision 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 E Ink and Plastron Precision

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

The idea behind E Ink Holdings and Plastron Precision Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.