Correlation Between Asia Tech and Advantech

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

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

Diversification Opportunities for Asia Tech and Advantech

-0.23

Correlation Coefficient

Asia Tech  Advantech

Very good diversification

The 3 months correlation between Asia and Advantech is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Asia Tech Image and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and Asia Tech 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 Tech Image are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of Asia Tech i.e., Asia Tech and Advantech go up and down completely randomly.

Pair Corralation between Asia Tech and Advantech

Assuming the 90 days trading horizon Asia Tech is expected to generate 2.49 times less return on investment than Advantech. In addition to that, Asia Tech is 1.34 times more volatile than Advantech Co. It trades about 0.01 of its total potential returns per unit of risk. Advantech Co is currently generating about 0.04 per unit of volatility. If you would invest  33,850  in Advantech Co on September 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Advantech Co or generate 2.95% return on investment over 90 days.

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

Asia Tech Image  vs.  Advantech Co

Asia Tech Image

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Tech Image has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Asia Tech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Advantech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Advantech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Asia Tech and Advantech

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

The idea behind Asia Tech Image and Advantech 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.