Correlation Between Aqua Public and AJ Advance

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

By analyzing existing cross correlation between Aqua Public and AJ Advance Technology, you can compare the effects of market volatilities on Aqua Public and AJ Advance 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 AJ Advance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Public and AJ Advance.

Diversification Opportunities for Aqua Public and AJ Advance

0.76

Correlation Coefficient

Aqua Public  AJ Advance

Poor diversification

The 3 months correlation between Aqua and AJA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Public and AJ Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Advance Technology 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 AJ Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Advance Technology has no effect on the direction of Aqua Public i.e., Aqua Public and AJ Advance go up and down completely randomly.

Pair Corralation between Aqua Public and AJ Advance

Assuming the 90 days trading horizon Aqua Public is expected to under-perform the AJ Advance. But the stock apears to be less risky and, when comparing its historical volatility, Aqua Public is 1.93 times less risky than AJ Advance. The stock trades about -0.06 of its potential returns per unit of risk. The AJ Advance Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  16.00  in AJ Advance Technology on October 8, 2024 and sell it today you would lose (1.00) from holding AJ Advance Technology or give up 6.25% of portfolio value over 90 days.

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

Aqua Public  vs.  AJ Advance Technology

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

AJ Advance Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AJ Advance Technology 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 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 Aqua Public and AJ Advance

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

The idea behind Aqua Public and AJ Advance Technology 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.