Correlation Between Intchains Group and Archer Materials

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

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

Diversification Opportunities for Intchains Group and Archer Materials

-0.17

Correlation Coefficient

Intchains Group  Archer Materials

Good diversification

The 3 months correlation between Intchains and Archer is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Intchains Group Limited and Archer Materials Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Materials and Intchains Group 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 Intchains Group Limited are associated (or correlated) with Archer Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Materials has no effect on the direction of Intchains Group i.e., Intchains Group and Archer Materials go up and down completely randomly.

Pair Corralation between Intchains Group and Archer Materials

Considering the 90-day investment horizon Intchains Group is expected to generate 1.99 times less return on investment than Archer Materials. In addition to that, Intchains Group is 1.4 times more volatile than Archer Materials Limited. It trades about 0.05 of its total potential returns per unit of risk. Archer Materials Limited is currently generating about 0.15 per unit of volatility. If you would invest  13.00  in Archer Materials Limited on September 22, 2024 and sell it today you would earn a total of  12.00  from holding Archer Materials Limited or generate 92.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Intchains Group Limited  vs.  Archer Materials Limited

Intchains Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intchains Group Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Intchains Group reported solid returns over the last few months and may actually be approaching a breakup point.

Archer Materials

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Materials Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Archer Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intchains Group and Archer Materials

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

The idea behind Intchains Group Limited and Archer Materials Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.