Correlation Between Advanced Info and BEC World

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

By analyzing existing cross correlation between Advanced Info Service and BEC World Public, you can compare the effects of market volatilities on Advanced Info and BEC World 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 Info with a short position of BEC World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Info and BEC World.

Diversification Opportunities for Advanced Info and BEC World

-0.4

Correlation Coefficient

Advanced Info  BEC World

Very good diversification

The 3 months correlation between Advanced and BEC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and BEC World Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEC World Public and Advanced Info 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 Info Service are associated (or correlated) with BEC World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEC World Public has no effect on the direction of Advanced Info i.e., Advanced Info and BEC World go up and down completely randomly.

Pair Corralation between Advanced Info and BEC World

Assuming the 90 days trading horizon Advanced Info Service is expected to generate 1.12 times more return on investment than BEC World. However, Advanced Info is 1.12 times more volatile than BEC World Public. It trades about 0.1 of its potential returns per unit of risk. BEC World Public is currently generating about -0.06 per unit of risk. If you would invest  26,000  in Advanced Info Service on September 27, 2024 and sell it today you would earn a total of  2,700  from holding Advanced Info Service or generate 10.38% return on investment over 90 days.

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

Advanced Info Service  vs.  BEC World Public

Advanced Info Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Advanced Info may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BEC World Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEC World Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, BEC World is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Advanced Info and BEC World

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

The idea behind Advanced Info Service and BEC World Public 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.