Correlation Between Advanced Information and ALT Telecom

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

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

Diversification Opportunities for Advanced Information and ALT Telecom

-0.86

Correlation Coefficient

Advanced Information  ALT Telecom

Pay attention - limited upside

The 3 months correlation between Advanced and ALT is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and ALT Telecom Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALT Telecom Public and Advanced Information 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 Information Technology are associated (or correlated) with ALT Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALT Telecom Public has no effect on the direction of Advanced Information i.e., Advanced Information and ALT Telecom go up and down completely randomly.

Pair Corralation between Advanced Information and ALT Telecom

Assuming the 90 days trading horizon Advanced Information Technology is expected to generate 0.92 times more return on investment than ALT Telecom. However, Advanced Information Technology is 1.08 times less risky than ALT Telecom. It trades about 0.12 of its potential returns per unit of risk. ALT Telecom Public is currently generating about -0.18 per unit of risk. If you would invest  406.00  in Advanced Information Technology on December 21, 2024 and sell it today you would earn a total of  56.00  from holding Advanced Information Technology or generate 13.79% return on investment over 90 days.

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

Advanced Information Technolog  vs.  ALT Telecom Public

Advanced Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Information Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Advanced Information disclosed solid returns over the last few months and may actually be approaching a breakup point.

ALT Telecom Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALT Telecom Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Advanced Information and ALT Telecom

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

The idea behind Advanced Information Technology and ALT Telecom 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.