Correlation Between Advanced Information and Jasmine Telecom

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

Diversification Opportunities for Advanced Information and Jasmine Telecom

0.34

Correlation Coefficient

Advanced Information  Jasmine Telecom

Weak diversification

The 3 months correlation between Advanced and Jasmine is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and Jasmine Telecom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jasmine Telecom Systems 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 Jasmine Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jasmine Telecom Systems has no effect on the direction of Advanced Information i.e., Advanced Information and Jasmine Telecom go up and down completely randomly.

Pair Corralation between Advanced Information and Jasmine Telecom

Assuming the 90 days trading horizon Advanced Information Technology is expected to generate 0.5 times more return on investment than Jasmine Telecom. However, Advanced Information Technology is 2.01 times less risky than Jasmine Telecom. It trades about -0.19 of its potential returns per unit of risk. Jasmine Telecom Systems is currently generating about -0.14 per unit of risk. If you would invest  440.00  in Advanced Information Technology on October 6, 2024 and sell it today you would lose (22.00) from holding Advanced Information Technology or give up 5.0% of portfolio value over 90 days.

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

Advanced Information Technolog  vs.  Jasmine Telecom Systems

Advanced Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jasmine Telecom Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jasmine Telecom Systems 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 February 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 Jasmine Telecom

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

The idea behind Advanced Information Technology and Jasmine Telecom Systems 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.