Correlation Between Seiko Epson and Identiv

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

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

Diversification Opportunities for Seiko Epson and Identiv

0.32

Correlation Coefficient

Seiko Epson  Identiv

Weak diversification

The 3 months correlation between Seiko and Identiv is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Seiko Epson and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Seiko Epson 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 Seiko Epson are associated (or correlated) with Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Seiko Epson i.e., Seiko Epson and Identiv go up and down completely randomly.

Pair Corralation between Seiko Epson and Identiv

Assuming the 90 days horizon Seiko Epson is expected to generate 0.38 times more return on investment than Identiv. However, Seiko Epson is 2.61 times less risky than Identiv. It trades about 0.15 of its potential returns per unit of risk. Identiv is currently generating about -0.05 per unit of risk. If you would invest  1,600  in Seiko Epson on September 22, 2024 and sell it today you would earn a total of  70.00  from holding Seiko Epson or generate 4.38% return on investment over 90 days.

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

Seiko Epson  vs.  Identiv

Seiko Epson

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seiko Epson are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Seiko Epson is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Identiv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Identiv may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Seiko Epson and Identiv

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

The idea behind Seiko Epson and Identiv 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.