Correlation Between E Ink and INPAQ Technology

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

Diversification Opportunities for E Ink and INPAQ Technology

0.62

Correlation Coefficient

E Ink  INPAQ Technology

Poor diversification

The 3 months correlation between 8069 and INPAQ is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding E Ink Holdings and INPAQ Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INPAQ Technology 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 INPAQ Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INPAQ Technology has no effect on the direction of E Ink i.e., E Ink and INPAQ Technology go up and down completely randomly.

Pair Corralation between E Ink and INPAQ Technology

Assuming the 90 days trading horizon E Ink Holdings is expected to under-perform the INPAQ Technology. In addition to that, E Ink is 1.12 times more volatile than INPAQ Technology Co. It trades about -0.04 of its total potential returns per unit of risk. INPAQ Technology Co is currently generating about -0.03 per unit of volatility. If you would invest  8,460  in INPAQ Technology Co on September 30, 2024 and sell it today you would lose (380.00) from holding INPAQ Technology Co or give up 4.49% of portfolio value over 90 days.

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

E Ink Holdings  vs.  INPAQ Technology 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 fairly stable basic indicators, E Ink is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

INPAQ Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind E Ink Holdings and INPAQ Technology 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.