Correlation Between Ingersoll Rand and Nongfu Spring

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

By analyzing existing cross correlation between Ingersoll Rand and Nongfu Spring Co, you can compare the effects of market volatilities on Ingersoll Rand and Nongfu Spring 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 Ingersoll Rand with a short position of Nongfu Spring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Nongfu Spring.

Diversification Opportunities for Ingersoll Rand and Nongfu Spring

0.39

Correlation Coefficient

Ingersoll Rand  Nongfu Spring

Weak diversification

The 3 months correlation between Ingersoll and Nongfu is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Nongfu Spring Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongfu Spring and Ingersoll Rand 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 Ingersoll Rand are associated (or correlated) with Nongfu Spring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongfu Spring has no effect on the direction of Ingersoll Rand i.e., Ingersoll Rand and Nongfu Spring go up and down completely randomly.

Pair Corralation between Ingersoll Rand and Nongfu Spring

Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 77.35 times less return on investment than Nongfu Spring. But when comparing it to its historical volatility, Ingersoll Rand is 1.12 times less risky than Nongfu Spring. It trades about 0.0 of its potential returns per unit of risk. Nongfu Spring Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  487.00  in Nongfu Spring Co on May 6, 2025 and sell it today you would earn a total of  71.00  from holding Nongfu Spring Co or generate 14.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ingersoll Rand  vs.  Nongfu Spring Co

Ingersoll Rand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ingersoll Rand has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ingersoll Rand is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Nongfu Spring

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nongfu Spring Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nongfu Spring reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingersoll Rand and Nongfu Spring

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

The idea behind Ingersoll Rand and Nongfu Spring Co 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.