Correlation Between INEO Tech and Advantage Solutions

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

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

Diversification Opportunities for INEO Tech and Advantage Solutions

-0.47

Correlation Coefficient

INEO Tech  Advantage Solutions

Very good diversification

The 3 months correlation between INEO and Advantage is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding INEO Tech Corp and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and INEO Tech 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 INEO Tech Corp are associated (or correlated) with Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of INEO Tech i.e., INEO Tech and Advantage Solutions go up and down completely randomly.

Pair Corralation between INEO Tech and Advantage Solutions

Assuming the 90 days horizon INEO Tech Corp is expected to under-perform the Advantage Solutions. In addition to that, INEO Tech is 2.31 times more volatile than Advantage Solutions. It trades about -0.03 of its total potential returns per unit of risk. Advantage Solutions is currently generating about -0.05 per unit of volatility. If you would invest  391.00  in Advantage Solutions on September 14, 2024 and sell it today you would lose (46.00) from holding Advantage Solutions or give up 11.76% of portfolio value over 90 days.

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

INEO Tech Corp  vs.  Advantage Solutions

INEO Tech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INEO Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Advantage Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advantage Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with INEO Tech and Advantage Solutions

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

The idea behind INEO Tech Corp and Advantage Solutions 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.