Correlation Between Andes Technology and Asia Vital

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

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

Diversification Opportunities for Andes Technology and Asia Vital

0.67

Correlation Coefficient

Andes Technology  Asia Vital

Poor diversification

The 3 months correlation between Andes and Asia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Andes Technology Corp 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 Andes 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 Andes Technology Corp 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 Andes Technology i.e., Andes Technology and Asia Vital go up and down completely randomly.

Pair Corralation between Andes Technology and Asia Vital

Assuming the 90 days trading horizon Andes Technology is expected to generate 1.01 times less return on investment than Asia Vital. But when comparing it to its historical volatility, Andes Technology Corp is 1.16 times less risky than Asia Vital. It trades about 0.13 of its potential returns per unit of risk. Asia Vital Components is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  53,700  in Asia Vital Components on September 18, 2024 and sell it today you would earn a total of  10,000  from holding Asia Vital Components or generate 18.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Andes Technology Corp  vs.  Asia Vital Components

Andes Technology Corp

Risk-Adjusted Performance

10 of 100

OK

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

Asia Vital Components

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Vital Components are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asia Vital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Andes Technology and Asia Vital

The main advantage of trading using opposite Andes Technology and Asia Vital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andes Technology 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 Andes Technology Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.