Correlation Between EQ and INEO Tech

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

By analyzing existing cross correlation between EQ Inc and INEO Tech Corp, you can compare the effects of market volatilities on EQ and INEO Tech 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 EQ with a short position of INEO Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ and INEO Tech.

Diversification Opportunities for EQ and INEO Tech

0.0

Correlation Coefficient

EQ  INEO Tech

Pay attention - limited upside

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

Pair Corralation between EQ and INEO Tech

If you would invest  2.72  in INEO Tech Corp on December 27, 2024 and sell it today you would earn a total of  0.51  from holding INEO Tech Corp or generate 18.75% return on investment over 90 days.

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

EQ Inc  vs.  INEO Tech Corp

EQ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days EQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EQ is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INEO Tech Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INEO Tech Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INEO Tech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EQ and INEO Tech

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

The idea behind EQ Inc and INEO Tech Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.