Correlation Between ALi Corp and Aiptek International

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

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

Diversification Opportunities for ALi Corp and Aiptek International

0.05

Correlation Coefficient

ALi Corp  Aiptek International

Significant diversification

The 3 months correlation between ALi and Aiptek is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ALi Corp and Aiptek International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aiptek International and ALi Corp 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 ALi Corp are associated (or correlated) with Aiptek International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aiptek International has no effect on the direction of ALi Corp i.e., ALi Corp and Aiptek International go up and down completely randomly.

Pair Corralation between ALi Corp and Aiptek International

Assuming the 90 days trading horizon ALi Corp is expected to under-perform the Aiptek International. But the stock apears to be less risky and, when comparing its historical volatility, ALi Corp is 1.13 times less risky than Aiptek International. The stock trades about -0.07 of its potential returns per unit of risk. The Aiptek International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,305  in Aiptek International on December 22, 2024 and sell it today you would earn a total of  5.00  from holding Aiptek International or generate 0.38% return on investment over 90 days.

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

ALi Corp  vs.  Aiptek International

ALi Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALi Corp 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.

Aiptek International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aiptek International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Aiptek International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ALi Corp and Aiptek International

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

The idea behind ALi Corp and Aiptek International 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.