Correlation Between Advtech and Boxer Retail

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

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

Diversification Opportunities for Advtech and Boxer Retail

0.04

Correlation Coefficient

Advtech  Boxer Retail

Significant diversification

The 3 months correlation between Advtech and Boxer is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Advtech and Boxer Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boxer Retail and Advtech 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 Advtech are associated (or correlated) with Boxer Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boxer Retail has no effect on the direction of Advtech i.e., Advtech and Boxer Retail go up and down completely randomly.

Pair Corralation between Advtech and Boxer Retail

Assuming the 90 days trading horizon Advtech is expected to generate 6.93 times less return on investment than Boxer Retail. But when comparing it to its historical volatility, Advtech is 3.19 times less risky than Boxer Retail. It trades about 0.1 of its potential returns per unit of risk. Boxer Retail is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  540,000  in Boxer Retail on September 23, 2024 and sell it today you would earn a total of  100,000  from holding Boxer Retail or generate 18.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	14.96%
Values	Daily Returns

Advtech  vs.  Boxer Retail

Advtech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advtech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Advtech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Boxer Retail

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boxer Retail are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Boxer Retail exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advtech and Boxer Retail

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

The idea behind Advtech and Boxer Retail 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.