Correlation Between Asia Vital and Adata Technology

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

By analyzing existing cross correlation between Asia Vital Components and Adata Technology Co, you can compare the effects of market volatilities on Asia Vital and Adata Technology 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 Asia Vital with a short position of Adata Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Vital and Adata Technology.

Diversification Opportunities for Asia Vital and Adata Technology

0.02

Correlation Coefficient

Asia Vital  Adata Technology

Significant diversification

The 3 months correlation between Asia and Adata is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Asia Vital Components and Adata Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adata Technology and Asia Vital 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 Asia Vital Components are associated (or correlated) with Adata Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adata Technology has no effect on the direction of Asia Vital i.e., Asia Vital and Adata Technology go up and down completely randomly.

Pair Corralation between Asia Vital and Adata Technology

Assuming the 90 days trading horizon Asia Vital Components is expected to under-perform the Adata Technology. In addition to that, Asia Vital is 1.47 times more volatile than Adata Technology Co. It trades about -0.07 of its total potential returns per unit of risk. Adata Technology Co is currently generating about 0.17 per unit of volatility. If you would invest  7,900  in Adata Technology Co on December 21, 2024 and sell it today you would earn a total of  1,630  from holding Adata Technology Co or generate 20.63% return on investment over 90 days.

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

Asia Vital Components  vs.  Adata Technology Co

Asia Vital Components

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Vital Components 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 fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Adata Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adata Technology Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Adata Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Vital and Adata Technology

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

The idea behind Asia Vital Components and Adata Technology Co 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.