Correlation Between Advanced Info and Frasers Property

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

By analyzing existing cross correlation between Advanced Info Service and Frasers Property Public, you can compare the effects of market volatilities on Advanced Info and Frasers Property 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 Info with a short position of Frasers Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Info and Frasers Property.

Diversification Opportunities for Advanced Info and Frasers Property

-0.55

Correlation Coefficient

Advanced Info  Frasers Property

Excellent diversification

The 3 months correlation between Advanced and Frasers is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and Frasers Property Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frasers Property Public and Advanced Info 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 Info Service are associated (or correlated) with Frasers Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frasers Property Public has no effect on the direction of Advanced Info i.e., Advanced Info and Frasers Property go up and down completely randomly.

Pair Corralation between Advanced Info and Frasers Property

Assuming the 90 days trading horizon Advanced Info Service is expected to generate 0.88 times more return on investment than Frasers Property. However, Advanced Info Service is 1.14 times less risky than Frasers Property. It trades about 0.09 of its potential returns per unit of risk. Frasers Property Public is currently generating about -0.02 per unit of risk. If you would invest  18,171  in Advanced Info Service on September 27, 2024 and sell it today you would earn a total of  10,429  from holding Advanced Info Service or generate 57.39% return on investment over 90 days.

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

Advanced Info Service  vs.  Frasers Property Public

Advanced Info Service

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Advanced Info may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Frasers Property Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frasers Property Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Frasers Property 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 Advanced Info and Frasers Property

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

The idea behind Advanced Info Service and Frasers Property Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.