Correlation Between E Ink and FineMat Applied

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

Diversification Opportunities for E Ink and FineMat Applied

0.76

Correlation Coefficient

E Ink  FineMat Applied

Poor diversification

The 3 months correlation between 8069 and FineMat is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding E Ink Holdings and FineMat Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FineMat Applied Materials 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 FineMat Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FineMat Applied Materials has no effect on the direction of E Ink i.e., E Ink and FineMat Applied go up and down completely randomly.

Pair Corralation between E Ink and FineMat Applied

Assuming the 90 days trading horizon E Ink Holdings is expected to under-perform the FineMat Applied. In addition to that, E Ink is 1.04 times more volatile than FineMat Applied Materials. It trades about -0.01 of its total potential returns per unit of risk. FineMat Applied Materials is currently generating about 0.04 per unit of volatility. If you would invest  3,745  in FineMat Applied Materials on October 8, 2024 and sell it today you would earn a total of  55.00  from holding FineMat Applied Materials or generate 1.47% return on investment over 90 days.

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

E Ink Holdings  vs.  FineMat Applied Materials

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.

FineMat Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FineMat Applied Materials 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with E Ink and FineMat Applied

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

The idea behind E Ink Holdings and FineMat Applied Materials 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.