Correlation Between Alpha En and Ionix Technology

Can any of the company-specific risk be diversified away by investing in both Alpha En and Ionix 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 Alpha En and Ionix Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between alpha En and Ionix Technology, you can compare the effects of market volatilities on Alpha En and Ionix 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 Alpha En with a short position of Ionix Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha En and Ionix Technology.

Diversification Opportunities for Alpha En and Ionix Technology

1.0

Correlation Coefficient

Alpha En  Ionix Technology

No risk reduction

The 3 months correlation between Alpha and Ionix is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding alpha En and Ionix Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ionix Technology and Alpha En 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 alpha En are associated (or correlated) with Ionix Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ionix Technology has no effect on the direction of Alpha En i.e., Alpha En and Ionix Technology go up and down completely randomly.

Pair Corralation between Alpha En and Ionix Technology

Given the investment horizon of 90 days alpha En is expected to under-perform the Ionix Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, alpha En is 2.95 times less risky than Ionix Technology. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Ionix Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.11  in Ionix Technology on September 14, 2024 and sell it today you would lose (0.10) from holding Ionix Technology or give up 90.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	88.04%
Values	Daily Returns

alpha En  vs.  Ionix Technology

alpha En

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alpha En has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Alpha En is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ionix Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ionix Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ionix Technology is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpha En and Ionix Technology

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

The idea behind alpha En and Ionix Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.