Correlation Between Inmax Holding and Realtek Semiconductor

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

By analyzing existing cross correlation between Inmax Holding Co and Realtek Semiconductor Corp, you can compare the effects of market volatilities on Inmax Holding and Realtek Semiconductor 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 Inmax Holding with a short position of Realtek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inmax Holding and Realtek Semiconductor.

Diversification Opportunities for Inmax Holding and Realtek Semiconductor

0.83

Correlation Coefficient

Inmax Holding  Realtek Semiconductor

Very poor diversification

The 3 months correlation between Inmax and Realtek is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Inmax Holding Co and Realtek Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realtek Semiconductor and Inmax Holding 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 Inmax Holding Co are associated (or correlated) with Realtek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realtek Semiconductor has no effect on the direction of Inmax Holding i.e., Inmax Holding and Realtek Semiconductor go up and down completely randomly.

Pair Corralation between Inmax Holding and Realtek Semiconductor

Assuming the 90 days trading horizon Inmax Holding Co is expected to generate 1.45 times more return on investment than Realtek Semiconductor. However, Inmax Holding is 1.45 times more volatile than Realtek Semiconductor Corp. It trades about 0.16 of its potential returns per unit of risk. Realtek Semiconductor Corp is currently generating about 0.1 per unit of risk. If you would invest  3,970  in Inmax Holding Co on February 6, 2024 and sell it today you would earn a total of  2,530  from holding Inmax Holding Co or generate 63.73% return on investment over 90 days.

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

Inmax Holding Co  vs.  Realtek Semiconductor Corp

Inmax Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inmax Holding Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Inmax Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Realtek Semiconductor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Realtek Semiconductor Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Realtek Semiconductor may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Inmax Holding and Realtek Semiconductor

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

The idea behind Inmax Holding Co and Realtek Semiconductor Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.