Correlation Between Inrad Optics and Deswell Industries

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

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

Diversification Opportunities for Inrad Optics and Deswell Industries

0.0

Correlation Coefficient

Inrad Optics  Deswell Industries

Pay attention - limited upside

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

Pair Corralation between Inrad Optics and Deswell Industries

If you would invest  249.00  in Deswell Industries on October 1, 2024 and sell it today you would earn a total of  2.00  from holding Deswell Industries or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Inrad Optics  vs.  Deswell Industries

Inrad Optics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inrad Optics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Inrad Optics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Deswell Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deswell Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Deswell Industries is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Inrad Optics and Deswell Industries

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

The idea behind Inrad Optics and Deswell Industries 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.