Correlation Between Austin Engineering and Ideanomics

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

By analyzing existing cross correlation between Austin Engineering Limited and Ideanomics, you can compare the effects of market volatilities on Austin Engineering and Ideanomics 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 Austin Engineering with a short position of Ideanomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austin Engineering and Ideanomics.

Diversification Opportunities for Austin Engineering and Ideanomics

-0.12

Correlation Coefficient

Austin Engineering  Ideanomics

Good diversification

The 3 months correlation between Austin and Ideanomics is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Austin Engineering Limited and Ideanomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideanomics and Austin Engineering 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 Austin Engineering Limited are associated (or correlated) with Ideanomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideanomics has no effect on the direction of Austin Engineering i.e., Austin Engineering and Ideanomics go up and down completely randomly.

Pair Corralation between Austin Engineering and Ideanomics

Assuming the 90 days horizon Austin Engineering is expected to generate 35.27 times less return on investment than Ideanomics. But when comparing it to its historical volatility, Austin Engineering Limited is 8.16 times less risky than Ideanomics. It trades about 0.04 of its potential returns per unit of risk. Ideanomics is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Ideanomics on September 22, 2024 and sell it today you would lose (17.96) from holding Ideanomics or give up 94.53% of portfolio value over 90 days.

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

Austin Engineering Limited  vs.  Ideanomics

Austin Engineering

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Austin Engineering Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Austin Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Ideanomics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ideanomics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Ideanomics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austin Engineering and Ideanomics

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

The idea behind Austin Engineering Limited and Ideanomics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.