Correlation Between Alpha En and Inrad Optics

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

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

Diversification Opportunities for Alpha En and Inrad Optics

0.0

Correlation Coefficient

Alpha En  Inrad Optics

Pay attention - limited upside

The 3 months correlation between Alpha and Inrad is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding alpha En and Inrad Optics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inrad Optics 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 Inrad Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inrad Optics has no effect on the direction of Alpha En i.e., Alpha En and Inrad Optics go up and down completely randomly.

Pair Corralation between Alpha En and Inrad Optics

If you would invest  0.01  in alpha En on December 25, 2024 and sell it today you would earn a total of  0.01  from holding alpha En or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

alpha En  vs.  Inrad Optics

alpha En

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in alpha En are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Alpha En exhibited solid returns over the last few months and may actually be approaching a breakup point.

Inrad Optics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Alpha En and Inrad Optics

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

The idea behind alpha En and Inrad Optics 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.