Correlation Between AJ Advance and XSpring Capital

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

Diversification Opportunities for AJ Advance and XSpring Capital

0.52

Correlation Coefficient

AJ Advance  XSpring Capital

Very weak diversification

The 3 months correlation between AJA and XSpring is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding AJ Advance Technology and XSpring Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XSpring Capital 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 XSpring Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XSpring Capital Public has no effect on the direction of AJ Advance i.e., AJ Advance and XSpring Capital go up and down completely randomly.

Pair Corralation between AJ Advance and XSpring Capital

Assuming the 90 days trading horizon AJ Advance Technology is expected to under-perform the XSpring Capital. In addition to that, AJ Advance is 1.66 times more volatile than XSpring Capital Public. It trades about 0.0 of its total potential returns per unit of risk. XSpring Capital Public is currently generating about 0.02 per unit of volatility. If you would invest  93.00  in XSpring Capital Public on September 4, 2024 and sell it today you would earn a total of  1.00  from holding XSpring Capital Public or generate 1.08% return on investment over 90 days.

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

AJ Advance Technology  vs.  XSpring Capital 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.

XSpring Capital Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XSpring Capital Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, XSpring Capital 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 AJ Advance and XSpring Capital

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

The idea behind AJ Advance Technology and XSpring Capital 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.