Correlation Between Chemtrade Logistics and Advent Wireless

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

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

Diversification Opportunities for Chemtrade Logistics and Advent Wireless

0.64

Correlation Coefficient

Chemtrade Logistics  Advent Wireless

Poor diversification

The 3 months correlation between Chemtrade and Advent is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless and Chemtrade Logistics 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 Chemtrade Logistics Income 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 Chemtrade Logistics i.e., Chemtrade Logistics and Advent Wireless go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and Advent Wireless

Assuming the 90 days trading horizon Chemtrade Logistics Income is expected to generate 0.27 times more return on investment than Advent Wireless. However, Chemtrade Logistics Income is 3.67 times less risky than Advent Wireless. It trades about 0.16 of its potential returns per unit of risk. Advent Wireless is currently generating about 0.02 per unit of risk. If you would invest  1,005  in Chemtrade Logistics Income on September 12, 2024 and sell it today you would earn a total of  134.00  from holding Chemtrade Logistics Income or generate 13.33% return on investment over 90 days.

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

Chemtrade Logistics Income  vs.  Advent Wireless

Chemtrade Logistics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chemtrade Logistics Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Chemtrade Logistics sustained solid returns over the last few months and may actually be approaching a breakup point.

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 abnormal basic indicators, Advent Wireless may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chemtrade Logistics and Advent Wireless

The main advantage of trading using opposite Chemtrade Logistics and Advent Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemtrade Logistics 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 Chemtrade Logistics Income 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.