Correlation Between Advanced Info and Jasmine International

Can any of the company-specific risk be diversified away by investing in both Advanced Info and Jasmine International 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 Jasmine International 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 Jasmine International Public, you can compare the effects of market volatilities on Advanced Info and Jasmine International 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 Jasmine International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Info and Jasmine International.

Diversification Opportunities for Advanced Info and Jasmine International

-0.59

Correlation Coefficient

Advanced Info  Jasmine International

Excellent diversification

The 3 months correlation between Advanced and Jasmine is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and Jasmine International Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jasmine International 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 Jasmine International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jasmine International has no effect on the direction of Advanced Info i.e., Advanced Info and Jasmine International go up and down completely randomly.

Pair Corralation between Advanced Info and Jasmine International

Assuming the 90 days trading horizon Advanced Info Service is expected to generate 0.58 times more return on investment than Jasmine International. However, Advanced Info Service is 1.73 times less risky than Jasmine International. It trades about 0.13 of its potential returns per unit of risk. Jasmine International Public is currently generating about -0.03 per unit of risk. If you would invest  24,800  in Advanced Info Service on September 3, 2024 and sell it today you would earn a total of  3,700  from holding Advanced Info Service or generate 14.92% 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.  Jasmine International Public

Advanced Info Service

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Advanced Info sustained solid returns over the last few months and may actually be approaching a breakup point.

Jasmine International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jasmine International Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Jasmine International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advanced Info and Jasmine International

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

The idea behind Advanced Info Service and Jasmine International 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.