Correlation Between Advanced Braking and Flagship Investments

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

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

Diversification Opportunities for Advanced Braking and Flagship Investments

0.58

Correlation Coefficient

Advanced Braking  Flagship Investments

Very weak diversification

The 3 months correlation between Advanced and Flagship is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship Investments and Advanced Braking 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 Braking Technology are associated (or correlated) with Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of Advanced Braking i.e., Advanced Braking and Flagship Investments go up and down completely randomly.

Pair Corralation between Advanced Braking and Flagship Investments

Assuming the 90 days trading horizon Advanced Braking Technology is expected to under-perform the Flagship Investments. In addition to that, Advanced Braking is 1.44 times more volatile than Flagship Investments. It trades about -0.12 of its total potential returns per unit of risk. Flagship Investments is currently generating about -0.11 per unit of volatility. If you would invest  219.00  in Flagship Investments on October 5, 2024 and sell it today you would lose (9.00) from holding Flagship Investments or give up 4.11% of portfolio value over 90 days.

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

Advanced Braking Technology  vs.  Flagship Investments

Advanced Braking Tec

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Braking Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Advanced Braking is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Flagship Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Flagship Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Advanced Braking and Flagship Investments

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

The idea behind Advanced Braking Technology and Flagship Investments 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.