Correlation Between Ingredion Incorporated and Trio Tech

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

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

Diversification Opportunities for Ingredion Incorporated and Trio Tech

0.34

Correlation Coefficient

Ingredion Incorporated  Trio Tech

Weak diversification

The 3 months correlation between Ingredion and Trio is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Trio Tech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Tech International and Ingredion Incorporated 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 Ingredion Incorporated are associated (or correlated) with Trio Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Tech International has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Trio Tech go up and down completely randomly.

Pair Corralation between Ingredion Incorporated and Trio Tech

Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 0.34 times more return on investment than Trio Tech. However, Ingredion Incorporated is 2.94 times less risky than Trio Tech. It trades about -0.39 of its potential returns per unit of risk. Trio Tech International is currently generating about -0.24 per unit of risk. If you would invest  14,198  in Ingredion Incorporated on October 8, 2024 and sell it today you would lose (791.00) from holding Ingredion Incorporated or give up 5.57% of portfolio value over 90 days.

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

Ingredion Incorporated  vs.  Trio Tech International

Ingredion Incorporated

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ingredion Incorporated are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Ingredion Incorporated is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Trio Tech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trio Tech International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Trio Tech is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ingredion Incorporated and Trio Tech

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

The idea behind Ingredion Incorporated and Trio Tech International 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.