Correlation Between Advanced Info and GUOTAI JUNAN

Can any of the company-specific risk be diversified away by investing in both Advanced Info and GUOTAI JUNAN 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 GUOTAI JUNAN 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 GUOTAI JUNAN SEC, you can compare the effects of market volatilities on Advanced Info and GUOTAI JUNAN 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 GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Info and GUOTAI JUNAN.

Diversification Opportunities for Advanced Info and GUOTAI JUNAN

0.24

Correlation Coefficient

Advanced Info  GUOTAI JUNAN

Modest diversification

The 3 months correlation between Advanced and GUOTAI is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC 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 GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of Advanced Info i.e., Advanced Info and GUOTAI JUNAN go up and down completely randomly.

Pair Corralation between Advanced Info and GUOTAI JUNAN

Assuming the 90 days trading horizon Advanced Info Service is expected to generate 1.15 times more return on investment than GUOTAI JUNAN. However, Advanced Info is 1.15 times more volatile than GUOTAI JUNAN SEC. It trades about 0.06 of its potential returns per unit of risk. GUOTAI JUNAN SEC is currently generating about 0.0 per unit of risk. If you would invest  740.00  in Advanced Info Service on October 22, 2024 and sell it today you would earn a total of  50.00  from holding Advanced Info Service or generate 6.76% return on investment over 90 days.

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

Advanced Info Service  vs.  GUOTAI JUNAN SEC

Advanced Info Service

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Advanced Info may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GUOTAI JUNAN SEC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUOTAI JUNAN SEC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GUOTAI JUNAN is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Advanced Info and GUOTAI JUNAN

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

The idea behind Advanced Info Service and GUOTAI JUNAN SEC 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.