Correlation Between Advance Information and Greatech Technology
Can any of the company-specific risk be diversified away by investing in both Advance Information and Greatech Technology 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 Advance Information and Greatech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Information Marketing and Greatech Technology Bhd, you can compare the effects of market volatilities on Advance Information and Greatech Technology 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 Advance Information with a short position of Greatech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Information and Greatech Technology.
Diversification Opportunities for Advance Information and Greatech Technology
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advance and Greatech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Advance Information Marketing and Greatech Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatech Technology Bhd and Advance Information 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 Advance Information Marketing are associated (or correlated) with Greatech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatech Technology Bhd has no effect on the direction of Advance Information i.e., Advance Information and Greatech Technology go up and down completely randomly.
Pair Corralation between Advance Information and Greatech Technology
Assuming the 90 days trading horizon Advance Information Marketing is expected to generate 1.8 times more return on investment than Greatech Technology. However, Advance Information is 1.8 times more volatile than Greatech Technology Bhd. It trades about 0.09 of its potential returns per unit of risk. Greatech Technology Bhd is currently generating about -0.03 per unit of risk. If you would invest 6.50 in Advance Information Marketing on September 4, 2024 and sell it today you would earn a total of 0.50 from holding Advance Information Marketing or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advance Information Marketing vs. Greatech Technology Bhd
Performance |
| Timeline |
| Advance Information |
| Greatech Technology Bhd |
Advance Information and Greatech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Information and Greatech Technology
The main advantage of trading using opposite Advance Information and Greatech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Information position performs unexpectedly, Greatech Technology 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 Greatech Technology will offset losses from the drop in Greatech Technology's long position.| Advance Information vs. Greatech Technology Bhd | Advance Information vs. Computer Forms Bhd | Advance Information vs. ES Ceramics Technology | Advance Information vs. Rubberex M |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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