Correlation Between Ingenia Communities and Ecofibre

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

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

Diversification Opportunities for Ingenia Communities and Ecofibre

-0.46

Correlation Coefficient

Ingenia Communities  Ecofibre

Very good diversification

The 3 months correlation between Ingenia and Ecofibre is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ingenia Communities Group and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and Ingenia Communities 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 Ingenia Communities Group are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Ingenia Communities i.e., Ingenia Communities and Ecofibre go up and down completely randomly.

Pair Corralation between Ingenia Communities and Ecofibre

Assuming the 90 days trading horizon Ingenia Communities Group is expected to generate 0.43 times more return on investment than Ecofibre. However, Ingenia Communities Group is 2.33 times less risky than Ecofibre. It trades about 0.14 of its potential returns per unit of risk. Ecofibre is currently generating about -0.03 per unit of risk. If you would invest  454.00  in Ingenia Communities Group on December 31, 2024 and sell it today you would earn a total of  96.00  from holding Ingenia Communities Group or generate 21.15% return on investment over 90 days.

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

Ingenia Communities Group  vs.  Ecofibre

Ingenia Communities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ingenia Communities Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ingenia Communities unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ecofibre

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecofibre has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ingenia Communities and Ecofibre

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

The idea behind Ingenia Communities Group and Ecofibre 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.