Correlation Between NGK Insulators and Inhibrx

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

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

Diversification Opportunities for NGK Insulators and Inhibrx

-0.48

Correlation Coefficient

NGK Insulators  Inhibrx

Very good diversification

The 3 months correlation between NGK and Inhibrx is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding NGK Insulators and Inhibrx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibrx and NGK Insulators 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 NGK Insulators are associated (or correlated) with Inhibrx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inhibrx has no effect on the direction of NGK Insulators i.e., NGK Insulators and Inhibrx go up and down completely randomly.

Pair Corralation between NGK Insulators and Inhibrx

Assuming the 90 days horizon NGK Insulators is expected to generate 19.86 times less return on investment than Inhibrx. But when comparing it to its historical volatility, NGK Insulators is 2.06 times less risky than Inhibrx. It trades about 0.01 of its potential returns per unit of risk. Inhibrx is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,383  in Inhibrx on September 16, 2024 and sell it today you would earn a total of  79.00  from holding Inhibrx or generate 5.71% return on investment over 90 days.

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

NGK Insulators  vs.  Inhibrx

NGK Insulators

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NGK Insulators are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, NGK Insulators may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Inhibrx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inhibrx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NGK Insulators and Inhibrx

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

The idea behind NGK Insulators and Inhibrx 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.