Correlation Between AJ Advance and Autocorp Holding

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

By analyzing existing cross correlation between AJ Advance Technology and Autocorp Holding Public, you can compare the effects of market volatilities on AJ Advance and Autocorp Holding 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 AJ Advance with a short position of Autocorp Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Advance and Autocorp Holding.

Diversification Opportunities for AJ Advance and Autocorp Holding

0.56

Correlation Coefficient

AJ Advance  Autocorp Holding

Very weak diversification

The 3 months correlation between AJA and Autocorp is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding AJ Advance Technology and Autocorp Holding Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autocorp Holding Public and AJ Advance 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 AJ Advance Technology are associated (or correlated) with Autocorp Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autocorp Holding Public has no effect on the direction of AJ Advance i.e., AJ Advance and Autocorp Holding go up and down completely randomly.

Pair Corralation between AJ Advance and Autocorp Holding

Assuming the 90 days trading horizon AJ Advance Technology is expected to generate 1.01 times more return on investment than Autocorp Holding. However, AJ Advance is 1.01 times more volatile than Autocorp Holding Public. It trades about 0.04 of its potential returns per unit of risk. Autocorp Holding Public is currently generating about 0.04 per unit of risk. If you would invest  20.00  in AJ Advance Technology on September 12, 2024 and sell it today you would lose (4.00) from holding AJ Advance Technology or give up 20.0% of portfolio value over 90 days.

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

AJ Advance Technology  vs.  Autocorp Holding Public

AJ Advance Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AJ Advance Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, AJ Advance is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Autocorp Holding Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autocorp Holding Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Autocorp Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AJ Advance and Autocorp Holding

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

The idea behind AJ Advance Technology and Autocorp Holding 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.