Correlation Between Advent Wireless and ExGen Resources

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Can any of the company-specific risk be diversified away by investing in both Advent Wireless and ExGen Resources 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 Advent Wireless and ExGen Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advent Wireless and ExGen Resources, you can compare the effects of market volatilities on Advent Wireless and ExGen Resources 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 Advent Wireless with a short position of ExGen Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Wireless and ExGen Resources.

Diversification Opportunities for Advent Wireless and ExGen Resources

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Advent and ExGen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Advent Wireless and ExGen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExGen Resources and Advent Wireless 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 Advent Wireless are associated (or correlated) with ExGen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExGen Resources has no effect on the direction of Advent Wireless i.e., Advent Wireless and ExGen Resources go up and down completely randomly.

Pair Corralation between Advent Wireless and ExGen Resources

Assuming the 90 days horizon Advent Wireless is expected to generate 4.05 times less return on investment than ExGen Resources. But when comparing it to its historical volatility, Advent Wireless is 3.42 times less risky than ExGen Resources. It trades about 0.03 of its potential returns per unit of risk. ExGen Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in ExGen Resources on October 25, 2024 and sell it today you would lose (5.00) from holding ExGen Resources or give up 45.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Advent Wireless  vs.  ExGen Resources

 Performance 
       Timeline  
Advent Wireless 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Advent Wireless are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Advent Wireless is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
ExGen Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ExGen Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ExGen Resources is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Advent Wireless and ExGen Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advent Wireless and ExGen Resources

The main advantage of trading using opposite Advent Wireless and ExGen Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Wireless position performs unexpectedly, ExGen Resources 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 ExGen Resources will offset losses from the drop in ExGen Resources' long position.
The idea behind Advent Wireless and ExGen Resources 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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