Correlation Between Advanced Information and Boutique Newcity

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

Diversification Opportunities for Advanced Information and Boutique Newcity

0.84

Correlation Coefficient

Advanced Information  Boutique Newcity

Very poor diversification

The 3 months correlation between Advanced and Boutique is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and Boutique Newcity Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boutique Newcity 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 Boutique Newcity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boutique Newcity Public has no effect on the direction of Advanced Information i.e., Advanced Information and Boutique Newcity go up and down completely randomly.

Pair Corralation between Advanced Information and Boutique Newcity

Assuming the 90 days trading horizon Advanced Information Technology is expected to generate 1.0 times more return on investment than Boutique Newcity. However, Advanced Information Technology is 1.0 times less risky than Boutique Newcity. It trades about 0.07 of its potential returns per unit of risk. Boutique Newcity Public is currently generating about 0.07 per unit of risk. If you would invest  435.00  in Advanced Information Technology on September 3, 2024 and sell it today you would lose (3.00) from holding Advanced Information Technology or give up 0.69% of portfolio value over 90 days.

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

Advanced Information Technolog  vs.  Boutique Newcity Public

Advanced Information

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Information Technology are ranked lower than 10 (%) 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.

Boutique Newcity Public

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Advanced Information and Boutique Newcity

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

The idea behind Advanced Information Technology and Boutique Newcity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.