Correlation Between Aqua Public and Advanced Info

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

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

Diversification Opportunities for Aqua Public and Advanced Info

-0.26

Correlation Coefficient

Aqua Public  Advanced Info

Very good diversification

The 3 months correlation between Aqua and Advanced is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Public and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service and Aqua Public 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 Aqua Public are associated (or correlated) with Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Aqua Public i.e., Aqua Public and Advanced Info go up and down completely randomly.

Pair Corralation between Aqua Public and Advanced Info

Assuming the 90 days trading horizon Aqua Public is expected to generate 37.33 times more return on investment than Advanced Info. However, Aqua Public is 37.33 times more volatile than Advanced Info Service. It trades about 0.04 of its potential returns per unit of risk. Advanced Info Service is currently generating about 0.08 per unit of risk. If you would invest  68.00  in Aqua Public on October 21, 2024 and sell it today you would lose (38.00) from holding Aqua Public or give up 55.88% of portfolio value over 90 days.

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

Aqua Public  vs.  Advanced Info Service

Aqua Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqua Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals 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.

Advanced Info Service

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aqua Public and Advanced Info

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

The idea behind Aqua Public and Advanced Info Service 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.