Correlation Between Adata Technology and Provision Information

Can any of the company-specific risk be diversified away by investing in both Adata Technology and Provision 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 Adata Technology and Provision Information 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 Provision Information CoLtd, you can compare the effects of market volatilities on Adata Technology and Provision 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 Adata Technology with a short position of Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adata Technology and Provision Information.

Diversification Opportunities for Adata Technology and Provision Information

-0.74

Correlation Coefficient

Adata Technology  Provision Information

Pay attention - limited upside

The 3 months correlation between Adata and Provision is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Adata Technology Co and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Adata Technology i.e., Adata Technology and Provision Information go up and down completely randomly.

Pair Corralation between Adata Technology and Provision Information

Assuming the 90 days trading horizon Adata Technology Co is expected to under-perform the Provision Information. In addition to that, Adata Technology is 1.24 times more volatile than Provision Information CoLtd. It trades about -0.27 of its total potential returns per unit of risk. Provision Information CoLtd is currently generating about 0.2 per unit of volatility. If you would invest  7,060  in Provision Information CoLtd on September 28, 2024 and sell it today you would earn a total of  390.00  from holding Provision Information CoLtd or generate 5.52% return on investment over 90 days.

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

Adata Technology Co  vs.  Provision Information CoLtd

Adata Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adata Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Provision Information

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Provision Information 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 Adata Technology and Provision Information

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

The idea behind Adata Technology Co and Provision Information CoLtd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.