Correlation Between Ardentec and Adata Technology

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

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

Diversification Opportunities for Ardentec and Adata Technology

-0.35

Correlation Coefficient

Ardentec  Adata Technology

Very good diversification

The 3 months correlation between Ardentec and Adata is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ardentec and Adata Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adata Technology 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 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 Ardentec i.e., Ardentec and Adata Technology go up and down completely randomly.

Pair Corralation between Ardentec and Adata Technology

Assuming the 90 days trading horizon Ardentec is expected to generate 1.59 times more return on investment than Adata Technology. However, Ardentec is 1.59 times more volatile than Adata Technology Co. It trades about 0.13 of its potential returns per unit of risk. Adata Technology Co is currently generating about -0.09 per unit of risk. If you would invest  5,620  in Ardentec on October 26, 2024 and sell it today you would earn a total of  1,270  from holding Ardentec or generate 22.6% return on investment over 90 days.

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

Ardentec  vs.  Adata Technology Co

Ardentec

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ardentec are ranked lower than 10 (%) 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.

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.

Pair Trading with Ardentec and Adata Technology

The main advantage of trading using opposite Ardentec and Adata Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardentec 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 Ardentec 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.