Correlation Between Inoue Rubber and I2 Enterprise

Can any of the company-specific risk be diversified away by investing in both Inoue Rubber and I2 Enterprise 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 Inoue Rubber and I2 Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inoue Rubber Public and I2 Enterprise Public, you can compare the effects of market volatilities on Inoue Rubber and I2 Enterprise 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 Inoue Rubber with a short position of I2 Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inoue Rubber and I2 Enterprise.

Diversification Opportunities for Inoue Rubber and I2 Enterprise

-0.26

Correlation Coefficient

Inoue Rubber  I2 Enterprise

Very good diversification

The 3 months correlation between Inoue and I2 Enterprise is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Inoue Rubber Public and I2 Enterprise Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I2 Enterprise Public and Inoue Rubber 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 Inoue Rubber Public are associated (or correlated) with I2 Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I2 Enterprise Public has no effect on the direction of Inoue Rubber i.e., Inoue Rubber and I2 Enterprise go up and down completely randomly.

Pair Corralation between Inoue Rubber and I2 Enterprise

Assuming the 90 days trading horizon Inoue Rubber Public is expected to generate 16.36 times more return on investment than I2 Enterprise. However, Inoue Rubber is 16.36 times more volatile than I2 Enterprise Public. It trades about 0.04 of its potential returns per unit of risk. I2 Enterprise Public is currently generating about -0.04 per unit of risk. If you would invest  1,374  in Inoue Rubber Public on September 20, 2024 and sell it today you would earn a total of  36.00  from holding Inoue Rubber Public or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.23%
Values	Daily Returns

Inoue Rubber Public  vs.  I2 Enterprise Public

Inoue Rubber Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inoue Rubber Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Inoue Rubber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

I2 Enterprise Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I2 Enterprise Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Inoue Rubber and I2 Enterprise

The main advantage of trading using opposite Inoue Rubber and I2 Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inoue Rubber position performs unexpectedly, I2 Enterprise 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 I2 Enterprise will offset losses from the drop in I2 Enterprise's long position.

The idea behind Inoue Rubber Public and I2 Enterprise Public 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.