Correlation Between 0010EPAF5 and Entegris

Can any of the company-specific risk be diversified away by investing in both 0010EPAF5 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 0010EPAF5 and Entegris into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX CENT and Entegris, you can compare the effects of market volatilities on 0010EPAF5 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 0010EPAF5 with a short position of Entegris. Check out your portfolio center. Please also check ongoing floating volatility patterns of 0010EPAF5 and Entegris.

Diversification Opportunities for 0010EPAF5 and Entegris

-0.32

Correlation Coefficient

0010EPAF5  Entegris

Very good diversification

The 3 months correlation between 0010EPAF5 and Entegris is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX CENT and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris and 0010EPAF5 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 AEP TEX CENT 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 0010EPAF5 i.e., 0010EPAF5 and Entegris go up and down completely randomly.

Pair Corralation between 0010EPAF5 and Entegris

Assuming the 90 days trading horizon AEP TEX CENT is expected to generate 0.39 times more return on investment than Entegris. However, AEP TEX CENT is 2.55 times less risky than Entegris. It trades about 0.02 of its potential returns per unit of risk. Entegris is currently generating about -0.01 per unit of risk. If you would invest  10,598  in AEP TEX CENT on December 25, 2024 and sell it today you would earn a total of  50.00  from holding AEP TEX CENT or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.88%
Values	Daily Returns

AEP TEX CENT  vs.  Entegris

AEP TEX CENT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX CENT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, 0010EPAF5 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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

Pair Trading with 0010EPAF5 and Entegris

The main advantage of trading using opposite 0010EPAF5 and Entegris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 0010EPAF5 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 AEP TEX CENT 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.