Correlation Between General Interface and Aiptek International

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

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

Diversification Opportunities for General Interface and Aiptek International

0.24

Correlation Coefficient

General Interface  Aiptek International

Modest diversification

The 3 months correlation between General and Aiptek is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Interface Solution and Aiptek International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aiptek International and General Interface 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 General Interface Solution are associated (or correlated) with Aiptek International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aiptek International has no effect on the direction of General Interface i.e., General Interface and Aiptek International go up and down completely randomly.

Pair Corralation between General Interface and Aiptek International

Assuming the 90 days trading horizon General Interface Solution is expected to generate 0.65 times more return on investment than Aiptek International. However, General Interface Solution is 1.54 times less risky than Aiptek International. It trades about 0.08 of its potential returns per unit of risk. Aiptek International is currently generating about 0.02 per unit of risk. If you would invest  4,790  in General Interface Solution on December 23, 2024 and sell it today you would earn a total of  500.00  from holding General Interface Solution or generate 10.44% return on investment over 90 days.

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

General Interface Solution  vs.  Aiptek International

General Interface

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Interface Solution are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, General Interface showed solid returns over the last few months and may actually be approaching a breakup point.

Aiptek International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aiptek International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Aiptek International 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 General Interface and Aiptek International

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

The idea behind General Interface Solution and Aiptek International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.