Correlation Between INGEVITY and Applied Blockchain

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

By analyzing existing cross correlation between INGEVITY P 3875 and Applied Blockchain, you can compare the effects of market volatilities on INGEVITY and Applied Blockchain 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 INGEVITY with a short position of Applied Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of INGEVITY and Applied Blockchain.

Diversification Opportunities for INGEVITY and Applied Blockchain

-0.15

Correlation Coefficient

INGEVITY  Applied Blockchain

Good diversification

The 3 months correlation between INGEVITY and Applied is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding INGEVITY P 3875 and Applied Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Blockchain and INGEVITY 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 INGEVITY P 3875 are associated (or correlated) with Applied Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Blockchain has no effect on the direction of INGEVITY i.e., INGEVITY and Applied Blockchain go up and down completely randomly.

Pair Corralation between INGEVITY and Applied Blockchain

Assuming the 90 days trading horizon INGEVITY is expected to generate 22.19 times less return on investment than Applied Blockchain. But when comparing it to its historical volatility, INGEVITY P 3875 is 12.47 times less risky than Applied Blockchain. It trades about 0.03 of its potential returns per unit of risk. Applied Blockchain is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  481.00  in Applied Blockchain on September 21, 2024 and sell it today you would earn a total of  341.00  from holding Applied Blockchain or generate 70.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.38%
Values	Daily Returns

INGEVITY P 3875  vs.  Applied Blockchain

INGEVITY P 3875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGEVITY P 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGEVITY P 3875 investors.

Applied Blockchain

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INGEVITY and Applied Blockchain

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

The idea behind INGEVITY P 3875 and Applied Blockchain 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.