Correlation Between Advanced International and Alexander Marine

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

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

Diversification Opportunities for Advanced International and Alexander Marine

0.95

Correlation Coefficient

Advanced International  Alexander Marine

Almost no diversification

The 3 months correlation between Advanced and Alexander is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Advanced International Multite and Alexander Marine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Marine and Advanced 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 Advanced International Multitech are associated (or correlated) with Alexander Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Marine has no effect on the direction of Advanced International i.e., Advanced International and Alexander Marine go up and down completely randomly.

Pair Corralation between Advanced International and Alexander Marine

Assuming the 90 days trading horizon Advanced International Multitech is expected to generate 0.34 times more return on investment than Alexander Marine. However, Advanced International Multitech is 2.97 times less risky than Alexander Marine. It trades about -0.32 of its potential returns per unit of risk. Alexander Marine Co is currently generating about -0.28 per unit of risk. If you would invest  8,140  in Advanced International Multitech on September 18, 2024 and sell it today you would lose (940.00) from holding Advanced International Multitech or give up 11.55% of portfolio value over 90 days.

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

Advanced International Multite  vs.  Alexander Marine Co

Advanced International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced International Multitech 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.

Alexander Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexander Marine Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Advanced International and Alexander Marine

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

The idea behind Advanced International Multitech and Alexander Marine 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.