Correlation Between Dear Cashmere and Aiadvertising

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

By analyzing existing cross correlation between Dear Cashmere Holding and Aiadvertising, you can compare the effects of market volatilities on Dear Cashmere and Aiadvertising 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 Dear Cashmere with a short position of Aiadvertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and Aiadvertising.

Diversification Opportunities for Dear Cashmere and Aiadvertising

0.52

Correlation Coefficient

Dear Cashmere  Aiadvertising

Very weak diversification

The 3 months correlation between Dear and Aiadvertising is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and Aiadvertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aiadvertising and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with Aiadvertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aiadvertising has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and Aiadvertising go up and down completely randomly.

Pair Corralation between Dear Cashmere and Aiadvertising

Given the investment horizon of 90 days Dear Cashmere Holding is expected to under-perform the Aiadvertising. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dear Cashmere Holding is 1.88 times less risky than Aiadvertising. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Aiadvertising is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.62  in Aiadvertising on December 30, 2024 and sell it today you would lose (0.47) from holding Aiadvertising or give up 75.81% of portfolio value over 90 days.

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

Dear Cashmere Holding  vs.  Aiadvertising

Dear Cashmere Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dear Cashmere Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Aiadvertising

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aiadvertising has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Aiadvertising is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dear Cashmere and Aiadvertising

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

The idea behind Dear Cashmere Holding and Aiadvertising 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.