Correlation Between Advanced International and O TA

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

By analyzing existing cross correlation between Advanced International Multitech and O TA Precision Industry, you can compare the effects of market volatilities on Advanced International and O TA 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 Advanced International with a short position of O TA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced International and O TA.

Diversification Opportunities for Advanced International and O TA

0.84

Correlation Coefficient

Advanced International  O TA

Very poor diversification

The 3 months correlation between Advanced and 8924 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Advanced International Multite and O TA Precision Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O TA Precision and Advanced International 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 Advanced International Multitech are associated (or correlated) with O TA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O TA Precision has no effect on the direction of Advanced International i.e., Advanced International and O TA go up and down completely randomly.

Pair Corralation between Advanced International and O TA

Assuming the 90 days trading horizon Advanced International Multitech is expected to under-perform the O TA. But the stock apears to be less risky and, when comparing its historical volatility, Advanced International Multitech is 1.19 times less risky than O TA. The stock trades about -0.27 of its potential returns per unit of risk. The O TA Precision Industry is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  8,780  in O TA Precision Industry on September 4, 2024 and sell it today you would lose (840.00) from holding O TA Precision Industry or give up 9.57% of portfolio value over 90 days.

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

Advanced International Multite  vs.  O TA Precision Industry

Advanced International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced International Multitech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

O TA Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days O TA Precision Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Advanced International and O TA

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

The idea behind Advanced International Multitech and O TA Precision Industry 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.