Correlation Between Advanced Info and Baylin Technologies

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

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

Diversification Opportunities for Advanced Info and Baylin Technologies

-0.14

Correlation Coefficient

Advanced Info  Baylin Technologies

Good diversification

The 3 months correlation between Advanced and Baylin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and Advanced Info 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 Info Service are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of Advanced Info i.e., Advanced Info and Baylin Technologies go up and down completely randomly.

Pair Corralation between Advanced Info and Baylin Technologies

Assuming the 90 days horizon Advanced Info Service is expected to generate 1.71 times more return on investment than Baylin Technologies. However, Advanced Info is 1.71 times more volatile than Baylin Technologies. It trades about 0.03 of its potential returns per unit of risk. Baylin Technologies is currently generating about -0.21 per unit of risk. If you would invest  830.00  in Advanced Info Service on December 30, 2024 and sell it today you would earn a total of  2.00  from holding Advanced Info Service or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.23%
Values	Daily Returns

Advanced Info Service  vs.  Baylin Technologies

Advanced Info Service

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Advanced Info showed solid returns over the last few months and may actually be approaching a breakup point.

Baylin Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baylin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Advanced Info and Baylin Technologies

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

The idea behind Advanced Info Service and Baylin Technologies 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.