Correlation Between ADLINK Technology and SuperAlloy Industrial

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

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

Diversification Opportunities for ADLINK Technology and SuperAlloy Industrial

0.56

Correlation Coefficient

ADLINK Technology  SuperAlloy Industrial

Very weak diversification

The 3 months correlation between ADLINK and SuperAlloy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ADLINK Technology and SuperAlloy Industrial Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SuperAlloy Industrial Co, and ADLINK 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 ADLINK Technology are associated (or correlated) with SuperAlloy Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SuperAlloy Industrial Co, has no effect on the direction of ADLINK Technology i.e., ADLINK Technology and SuperAlloy Industrial go up and down completely randomly.

Pair Corralation between ADLINK Technology and SuperAlloy Industrial

Assuming the 90 days trading horizon ADLINK Technology is expected to generate 1.42 times less return on investment than SuperAlloy Industrial. In addition to that, ADLINK Technology is 1.79 times more volatile than SuperAlloy Industrial Co,. It trades about 0.1 of its total potential returns per unit of risk. SuperAlloy Industrial Co, is currently generating about 0.25 per unit of volatility. If you would invest  5,440  in SuperAlloy Industrial Co, on December 24, 2024 and sell it today you would earn a total of  1,430  from holding SuperAlloy Industrial Co, or generate 26.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

ADLINK Technology  vs.  SuperAlloy Industrial Co,

ADLINK Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADLINK Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ADLINK Technology showed solid returns over the last few months and may actually be approaching a breakup point.

SuperAlloy Industrial Co,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SuperAlloy Industrial Co, are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SuperAlloy Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADLINK Technology and SuperAlloy Industrial

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

The idea behind ADLINK Technology and SuperAlloy Industrial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.