Correlation Between Iat Automobile and AVCON Information

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

By analyzing existing cross correlation between Iat Automobile Technology and AVCON Information Tech, you can compare the effects of market volatilities on Iat Automobile and AVCON Information 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 Iat Automobile with a short position of AVCON Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iat Automobile and AVCON Information.

Diversification Opportunities for Iat Automobile and AVCON Information

0.9

Correlation Coefficient

Iat Automobile  AVCON Information

Almost no diversification

The 3 months correlation between Iat and AVCON is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and AVCON Information Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVCON Information Tech and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with AVCON Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVCON Information Tech has no effect on the direction of Iat Automobile i.e., Iat Automobile and AVCON Information go up and down completely randomly.

Pair Corralation between Iat Automobile and AVCON Information

Assuming the 90 days trading horizon Iat Automobile Technology is expected to generate 0.84 times more return on investment than AVCON Information. However, Iat Automobile Technology is 1.19 times less risky than AVCON Information. It trades about -0.04 of its potential returns per unit of risk. AVCON Information Tech is currently generating about -0.16 per unit of risk. If you would invest  1,198  in Iat Automobile Technology on September 28, 2024 and sell it today you would lose (43.00) from holding Iat Automobile Technology or give up 3.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Iat Automobile Technology  vs.  AVCON Information Tech

Iat Automobile Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AVCON Information Tech

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Iat Automobile and AVCON Information

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

The idea behind Iat Automobile Technology and AVCON Information Tech 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.