Correlation Between Advantech and Airtac International

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

By analyzing existing cross correlation between Advantech Co and Airtac International Group, you can compare the effects of market volatilities on Advantech and Airtac International 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 Advantech with a short position of Airtac International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantech and Airtac International.

Diversification Opportunities for Advantech and Airtac International

-0.5

Correlation Coefficient

Advantech  Airtac International

Very good diversification

The 3 months correlation between Advantech and Airtac is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Advantech Co and Airtac International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtac International and Advantech 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 Advantech Co are associated (or correlated) with Airtac International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtac International has no effect on the direction of Advantech i.e., Advantech and Airtac International go up and down completely randomly.

Pair Corralation between Advantech and Airtac International

Assuming the 90 days trading horizon Advantech is expected to generate 1.2 times less return on investment than Airtac International. But when comparing it to its historical volatility, Advantech Co is 1.77 times less risky than Airtac International. It trades about 0.09 of its potential returns per unit of risk. Airtac International Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  77,400  in Airtac International Group on September 14, 2024 and sell it today you would earn a total of  6,600  from holding Airtac International Group or generate 8.53% return on investment over 90 days.

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

Advantech Co  vs.  Airtac International Group

Advantech

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Airtac International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Airtac International Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Airtac International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Advantech and Airtac International

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

The idea behind Advantech Co and Airtac International Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.