Correlation Between Advancetek Enterprise and New Asia

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

By analyzing existing cross correlation between Advancetek Enterprise Co and New Asia Construction, you can compare the effects of market volatilities on Advancetek Enterprise and New Asia 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 Advancetek Enterprise with a short position of New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advancetek Enterprise and New Asia.

Diversification Opportunities for Advancetek Enterprise and New Asia

0.78

Correlation Coefficient

Advancetek Enterprise  New Asia

Poor diversification

The 3 months correlation between Advancetek and New is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Advancetek Enterprise Co and New Asia Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Construction and Advancetek 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 Advancetek Enterprise Co are associated (or correlated) with New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Construction has no effect on the direction of Advancetek Enterprise i.e., Advancetek Enterprise and New Asia go up and down completely randomly.

Pair Corralation between Advancetek Enterprise and New Asia

Assuming the 90 days trading horizon Advancetek Enterprise Co is expected to generate 2.36 times more return on investment than New Asia. However, Advancetek Enterprise is 2.36 times more volatile than New Asia Construction. It trades about 0.15 of its potential returns per unit of risk. New Asia Construction is currently generating about 0.25 per unit of risk. If you would invest  6,140  in Advancetek Enterprise Co on September 4, 2024 and sell it today you would earn a total of  1,980  from holding Advancetek Enterprise Co or generate 32.25% return on investment over 90 days.

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

Advancetek Enterprise Co  vs.  New Asia Construction

Advancetek Enterprise

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advancetek Enterprise Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advancetek Enterprise showed solid returns over the last few months and may actually be approaching a breakup point.

New Asia Construction

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New Asia Construction are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Asia showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advancetek Enterprise and New Asia

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

The idea behind Advancetek Enterprise Co and New Asia Construction 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..