Correlation Between Amotiv and Advent Wireless

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

By analyzing existing cross correlation between Amotiv Limited and Advent Wireless, you can compare the effects of market volatilities on Amotiv and Advent Wireless 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 Amotiv with a short position of Advent Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amotiv and Advent Wireless.

Diversification Opportunities for Amotiv and Advent Wireless

-0.42

Correlation Coefficient

Amotiv  Advent Wireless

Very good diversification

The 3 months correlation between Amotiv and Advent is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Amotiv Limited and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless and Amotiv 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 Amotiv Limited are associated (or correlated) with Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Amotiv i.e., Amotiv and Advent Wireless go up and down completely randomly.

Pair Corralation between Amotiv and Advent Wireless

Assuming the 90 days trading horizon Amotiv is expected to generate 3.2 times less return on investment than Advent Wireless. But when comparing it to its historical volatility, Amotiv Limited is 2.2 times less risky than Advent Wireless. It trades about 0.01 of its potential returns per unit of risk. Advent Wireless is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Advent Wireless on September 24, 2024 and sell it today you would lose (4.00) from holding Advent Wireless or give up 5.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Amotiv Limited  vs.  Advent Wireless

Amotiv Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amotiv Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Advent Wireless

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Wireless are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Advent Wireless may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Amotiv and Advent Wireless

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

The idea behind Amotiv Limited and Advent Wireless 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.