Correlation Between The9 and Entegris

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

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

Diversification Opportunities for The9 and Entegris

0.53

Correlation Coefficient

The9  Entegris

Very weak diversification

The 3 months correlation between The9 and Entegris is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding The9 Ltd ADR and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris and The9 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 The9 Ltd ADR are associated (or correlated) with Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of The9 i.e., The9 and Entegris go up and down completely randomly.

Pair Corralation between The9 and Entegris

Given the investment horizon of 90 days The9 Ltd ADR is expected to generate 2.07 times more return on investment than Entegris. However, The9 is 2.07 times more volatile than Entegris. It trades about 0.01 of its potential returns per unit of risk. Entegris is currently generating about -0.04 per unit of risk. If you would invest  1,547  in The9 Ltd ADR on December 28, 2024 and sell it today you would lose (87.00) from holding The9 Ltd ADR or give up 5.62% of portfolio value over 90 days.

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

The9 Ltd ADR  vs.  Entegris

The9 Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days The9 Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, The9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Entegris

Risk-Adjusted Performance

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with The9 and Entegris

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

The idea behind The9 Ltd ADR and Entegris 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.