Correlation Between Entegris and The9

Can any of the company-specific risk be diversified away by investing in both Entegris and The9 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 Entegris and The9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entegris and The9 Ltd ADR, you can compare the effects of market volatilities on Entegris and The9 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 Entegris with a short position of The9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entegris and The9.

Diversification Opportunities for Entegris and The9

-0.49

Correlation Coefficient

Entegris  The9

Very good diversification

The 3 months correlation between Entegris and The9 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and The9 Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The9 Ltd ADR and Entegris 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 Entegris are associated (or correlated) with The9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The9 Ltd ADR has no effect on the direction of Entegris i.e., Entegris and The9 go up and down completely randomly.

Pair Corralation between Entegris and The9

Given the investment horizon of 90 days Entegris is expected to generate 8.39 times less return on investment than The9. But when comparing it to its historical volatility, Entegris is 2.77 times less risky than The9. It trades about 0.15 of its potential returns per unit of risk. The9 Ltd ADR is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  818.00  in The9 Ltd ADR on September 5, 2024 and sell it today you would earn a total of  637.00  from holding The9 Ltd ADR or generate 77.87% return on investment over 90 days.

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

Entegris  vs.  The9 Ltd ADR

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

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

The9 Ltd ADR

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The9 Ltd ADR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, The9 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entegris and The9

The main advantage of trading using opposite Entegris and The9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entegris position performs unexpectedly, The9 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 The9 will offset losses from the drop in The9's long position.

The idea behind Entegris and The9 Ltd ADR 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.