Correlation Between Asia Media and Advance Information

Can any of the company-specific risk be diversified away by investing in both Asia Media and Advance Information 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 Asia Media and Advance Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Media Group and Advance Information Marketing, you can compare the effects of market volatilities on Asia Media and Advance Information 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 Asia Media with a short position of Advance Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Media and Advance Information.

Diversification Opportunities for Asia Media and Advance Information

0.1

Correlation Coefficient

Asia Media  Advance Information

Average diversification

The 3 months correlation between Asia and Advance is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Asia Media Group and Advance Information Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Information and Asia Media 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 Asia Media Group are associated (or correlated) with Advance Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Information has no effect on the direction of Asia Media i.e., Asia Media and Advance Information go up and down completely randomly.

Pair Corralation between Asia Media and Advance Information

Assuming the 90 days trading horizon Asia Media Group is expected to generate 1.86 times more return on investment than Advance Information. However, Asia Media is 1.86 times more volatile than Advance Information Marketing. It trades about 0.04 of its potential returns per unit of risk. Advance Information Marketing is currently generating about 0.01 per unit of risk. If you would invest  10.00  in Asia Media Group on September 14, 2024 and sell it today you would lose (0.50) from holding Asia Media Group or give up 5.0% of portfolio value over 90 days.

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

Asia Media Group  vs.  Advance Information Marketing

Asia Media Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Media Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Advance Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asia Media and Advance Information

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

The idea behind Asia Media Group and Advance Information Marketing 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..