Correlation Between Ardentec and Asia Vital

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

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

Diversification Opportunities for Ardentec and Asia Vital

-0.75

Correlation Coefficient

Ardentec  Asia Vital

Pay attention - limited upside

The 3 months correlation between Ardentec and Asia is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ardentec 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 Ardentec 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 Ardentec 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 Ardentec i.e., Ardentec and Asia Vital go up and down completely randomly.

Pair Corralation between Ardentec and Asia Vital

Assuming the 90 days trading horizon Ardentec is expected to generate 0.97 times more return on investment than Asia Vital. However, Ardentec is 1.03 times less risky than Asia Vital. It trades about 0.19 of its potential returns per unit of risk. Asia Vital Components is currently generating about -0.08 per unit of risk. If you would invest  5,520  in Ardentec on December 22, 2024 and sell it today you would earn a total of  1,930  from holding Ardentec or generate 34.96% return on investment over 90 days.

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

Ardentec  vs.  Asia Vital Components

Ardentec

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ardentec are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ardentec 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 Ardentec and Asia Vital

The main advantage of trading using opposite Ardentec and Asia Vital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardentec 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 Ardentec 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.