Correlation Between Crown Electrokinetics and Ingevity Corp

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

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

Diversification Opportunities for Crown Electrokinetics and Ingevity Corp

-0.8

Correlation Coefficient

Crown Electrokinetics  Ingevity Corp

Pay attention - limited upside

The 3 months correlation between Crown and Ingevity is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Crown Electrokinetics Corp and Ingevity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevity Corp and Crown Electrokinetics 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 Crown Electrokinetics Corp are associated (or correlated) with Ingevity Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingevity Corp has no effect on the direction of Crown Electrokinetics i.e., Crown Electrokinetics and Ingevity Corp go up and down completely randomly.

Pair Corralation between Crown Electrokinetics and Ingevity Corp

Given the investment horizon of 90 days Crown Electrokinetics Corp is expected to under-perform the Ingevity Corp. In addition to that, Crown Electrokinetics is 1.75 times more volatile than Ingevity Corp. It trades about -0.36 of its total potential returns per unit of risk. Ingevity Corp is currently generating about 0.1 per unit of volatility. If you would invest  3,771  in Ingevity Corp on September 14, 2024 and sell it today you would earn a total of  934.00  from holding Ingevity Corp or generate 24.77% return on investment over 90 days.

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

Crown Electrokinetics Corp  vs.  Ingevity Corp

Crown Electrokinetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Electrokinetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ingevity Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ingevity Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Ingevity Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crown Electrokinetics and Ingevity Corp

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

The idea behind Crown Electrokinetics Corp and Ingevity 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..