Correlation Between Ingen Technologies and CochLear

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

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

Diversification Opportunities for Ingen Technologies and CochLear

0.0

Correlation Coefficient

Ingen Technologies  CochLear

Pay attention - limited upside

The 3 months correlation between Ingen and CochLear is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ingen Technologies and CochLear Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CochLear ADR and Ingen Technologies 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 Ingen Technologies are associated (or correlated) with CochLear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CochLear ADR has no effect on the direction of Ingen Technologies i.e., Ingen Technologies and CochLear go up and down completely randomly.

Pair Corralation between Ingen Technologies and CochLear

Given the investment horizon of 90 days Ingen Technologies is expected to generate 71.17 times more return on investment than CochLear. However, Ingen Technologies is 71.17 times more volatile than CochLear Ltd ADR. It trades about 0.1 of its potential returns per unit of risk. CochLear Ltd ADR is currently generating about 0.08 per unit of risk. If you would invest  0.01  in Ingen Technologies on January 27, 2024 and sell it today you would lose (0.01) from holding Ingen Technologies or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ingen Technologies  vs.  CochLear Ltd ADR

Ingen Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ingen Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CochLear ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CochLear Ltd ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, CochLear is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ingen Technologies and CochLear

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

The idea behind Ingen Technologies and CochLear Ltd ADR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.