Correlation Between Advanced Info and Unique Engineering

Can any of the company-specific risk be diversified away by investing in both Advanced Info and Unique Engineering 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 Unique Engineering 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 Unique Engineering and, you can compare the effects of market volatilities on Advanced Info and Unique Engineering 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 Unique Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Info and Unique Engineering.

Diversification Opportunities for Advanced Info and Unique Engineering

-0.59

Correlation Coefficient

Advanced Info  Unique Engineering

Excellent diversification

The 3 months correlation between Advanced and Unique is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and Unique Engineering and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unique Engineering and 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 Unique Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unique Engineering and has no effect on the direction of Advanced Info i.e., Advanced Info and Unique Engineering go up and down completely randomly.

Pair Corralation between Advanced Info and Unique Engineering

Assuming the 90 days trading horizon Advanced Info is expected to generate 25.62 times less return on investment than Unique Engineering. But when comparing it to its historical volatility, Advanced Info Service is 56.54 times less risky than Unique Engineering. It trades about 0.18 of its potential returns per unit of risk. Unique Engineering and is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  278.00  in Unique Engineering and on September 26, 2024 and sell it today you would lose (16.00) from holding Unique Engineering and or give up 5.76% of portfolio value over 90 days.

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

Advanced Info Service  vs.  Unique Engineering and

Advanced Info Service

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 6 (%) 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.

Unique Engineering and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unique Engineering and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Advanced Info and Unique Engineering

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

The idea behind Advanced Info Service and Unique Engineering and 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.