Correlation Between Asia Plus and Advanced Information

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

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

Diversification Opportunities for Asia Plus and Advanced Information

0.38

Correlation Coefficient

Asia Plus  Advanced Information

Weak diversification

The 3 months correlation between Asia and Advanced is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Asia Plus Group and Advanced Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Information and Asia Plus 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 Asia Plus Group are associated (or correlated) with Advanced Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Information has no effect on the direction of Asia Plus i.e., Asia Plus and Advanced Information go up and down completely randomly.

Pair Corralation between Asia Plus and Advanced Information

Assuming the 90 days trading horizon Asia Plus is expected to generate 132.97 times less return on investment than Advanced Information. But when comparing it to its historical volatility, Asia Plus Group is 77.29 times less risky than Advanced Information. It trades about 0.07 of its potential returns per unit of risk. Advanced Information Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Advanced Information Technology on September 3, 2024 and sell it today you would earn a total of  432.00  from holding Advanced Information Technology or generate 9.223372036854776E16% return on investment over 90 days.

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

Asia Plus Group  vs.  Advanced Information Technolog

Asia Plus Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Plus Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Plus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Asia Plus and Advanced Information

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

The idea behind Asia Plus Group and Advanced Information 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.