Correlation Between Datavan International and Advantech

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

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

Diversification Opportunities for Datavan International and Advantech

0.3

Correlation Coefficient

Datavan International  Advantech

Weak diversification

The 3 months correlation between Datavan and Advantech is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Datavan International and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and Datavan International 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 Datavan International are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of Datavan International i.e., Datavan International and Advantech go up and down completely randomly.

Pair Corralation between Datavan International and Advantech

Assuming the 90 days trading horizon Datavan International is expected to under-perform the Advantech. In addition to that, Datavan International is 1.59 times more volatile than Advantech Co. It trades about -0.03 of its total potential returns per unit of risk. Advantech Co is currently generating about 0.14 per unit of volatility. If you would invest  31,800  in Advantech Co on October 24, 2024 and sell it today you would earn a total of  4,900  from holding Advantech Co or generate 15.41% return on investment over 90 days.

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

Datavan International  vs.  Advantech Co

Datavan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datavan International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Datavan International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Advantech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Datavan International and Advantech

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

The idea behind Datavan International and Advantech 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.