Correlation Between Feintool International and Adval Tech

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

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

Diversification Opportunities for Feintool International and Adval Tech

0.79

Correlation Coefficient

Feintool International  Adval Tech

Poor diversification

The 3 months correlation between Feintool and Adval is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Feintool International Holding and Adval Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adval Tech Holding and Feintool International 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 Feintool International Holding are associated (or correlated) with Adval Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adval Tech Holding has no effect on the direction of Feintool International i.e., Feintool International and Adval Tech go up and down completely randomly.

Pair Corralation between Feintool International and Adval Tech

Assuming the 90 days trading horizon Feintool International Holding is expected to under-perform the Adval Tech. But the stock apears to be less risky and, when comparing its historical volatility, Feintool International Holding is 1.64 times less risky than Adval Tech. The stock trades about -0.13 of its potential returns per unit of risk. The Adval Tech Holding is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  8,700  in Adval Tech Holding on September 13, 2024 and sell it today you would lose (800.00) from holding Adval Tech Holding or give up 9.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	78.13%
Values	Daily Returns

Feintool International Holding  vs.  Adval Tech Holding

Feintool International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Feintool International Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Adval Tech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Feintool International and Adval Tech

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

The idea behind Feintool International Holding and Adval Tech Holding 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.