Correlation Between Adata Technology and Asia Vital

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

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

Diversification Opportunities for Adata Technology and Asia Vital

0.02

Correlation Coefficient

Adata Technology  Asia Vital

Significant diversification

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

Pair Corralation between Adata Technology and Asia Vital

Assuming the 90 days trading horizon Adata Technology Co is expected to generate 0.68 times more return on investment than Asia Vital. However, Adata Technology Co is 1.47 times less risky than Asia Vital. It trades about 0.17 of its potential returns per unit of risk. Asia Vital Components is currently generating about -0.07 per unit of risk. 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

Adata Technology Co  vs.  Asia Vital Components

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.

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.

Pair Trading with Adata Technology and Asia Vital

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

The idea behind Adata Technology Co and Asia Vital Components 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.