Correlation Between Boutique Newcity and Advanced Information

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

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

Diversification Opportunities for Boutique Newcity and Advanced Information

-0.38

Correlation Coefficient

Boutique Newcity  Advanced Information

Very good diversification

The 3 months correlation between Boutique and Advanced is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Boutique Newcity Public and Advanced Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Information and Boutique Newcity 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 Boutique Newcity Public 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 Boutique Newcity i.e., Boutique Newcity and Advanced Information go up and down completely randomly.

Pair Corralation between Boutique Newcity and Advanced Information

Assuming the 90 days trading horizon Boutique Newcity Public is expected to under-perform the Advanced Information. In addition to that, Boutique Newcity is 1.66 times more volatile than Advanced Information Technology. It trades about -0.13 of its total potential returns per unit of risk. Advanced Information Technology is currently generating about 0.01 per unit of volatility. If you would invest  446.00  in Advanced Information Technology on December 1, 2024 and sell it today you would earn a total of  2.00  from holding Advanced Information Technology or generate 0.45% return on investment over 90 days.

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

Boutique Newcity Public  vs.  Advanced Information Technolog

Boutique Newcity Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boutique Newcity 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Advanced Information

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Information Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Advanced Information is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Boutique Newcity and Advanced Information

The main advantage of trading using opposite Boutique Newcity and Advanced Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boutique Newcity 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 Boutique Newcity Public 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.