Correlation Between DDC Enterprise and Ingredion Incorporated

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

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

Diversification Opportunities for DDC Enterprise and Ingredion Incorporated

-0.76

Correlation Coefficient

DDC Enterprise  Ingredion Incorporated

Pay attention - limited upside

The 3 months correlation between DDC and Ingredion is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding DDC Enterprise Limited and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated and DDC Enterprise 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 DDC Enterprise Limited are associated (or correlated) with Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of DDC Enterprise i.e., DDC Enterprise and Ingredion Incorporated go up and down completely randomly.

Pair Corralation between DDC Enterprise and Ingredion Incorporated

Considering the 90-day investment horizon DDC Enterprise Limited is expected to under-perform the Ingredion Incorporated. In addition to that, DDC Enterprise is 10.15 times more volatile than Ingredion Incorporated. It trades about -0.04 of its total potential returns per unit of risk. Ingredion Incorporated is currently generating about 0.07 per unit of volatility. If you would invest  10,526  in Ingredion Incorporated on September 12, 2024 and sell it today you would earn a total of  3,863  from holding Ingredion Incorporated or generate 36.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	75.57%
Values	Daily Returns

DDC Enterprise Limited  vs.  Ingredion Incorporated

DDC Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DDC Enterprise Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ingredion Incorporated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ingredion Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Ingredion Incorporated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DDC Enterprise and Ingredion Incorporated

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

The idea behind DDC Enterprise Limited and Ingredion Incorporated 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.