Correlation Between Fortune Information and Adata Technology
Can any of the company-specific risk be diversified away by investing in both Fortune Information and Adata 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 Fortune Information and Adata Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Information Systems and Adata Technology Co, you can compare the effects of market volatilities on Fortune Information and Adata 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 Fortune Information with a short position of Adata Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Information and Adata Technology.
Diversification Opportunities for Fortune Information and Adata Technology
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortune and Adata is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Information Systems and Adata Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adata Technology and Fortune 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 Fortune Information Systems are associated (or correlated) with Adata Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adata Technology has no effect on the direction of Fortune Information i.e., Fortune Information and Adata Technology go up and down completely randomly.
Pair Corralation between Fortune Information and Adata Technology
Assuming the 90 days trading horizon Fortune Information Systems is expected to under-perform the Adata Technology. But the stock apears to be less risky and, when comparing its historical volatility, Fortune Information Systems is 1.11 times less risky than Adata Technology. The stock trades about -0.43 of its potential returns per unit of risk. The Adata Technology Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,610 in Adata Technology Co on September 2, 2024 and sell it today you would earn a total of 110.00 from holding Adata Technology Co or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortune Information Systems vs. Adata Technology Co
Performance |
| Timeline |
| Fortune Information |
| Adata Technology |
Fortune Information and Adata Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Information and Adata Technology
The main advantage of trading using opposite Fortune Information and Adata Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Information position performs unexpectedly, Adata 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 Adata Technology will offset losses from the drop in Adata Technology's long position.The idea behind Fortune Information Systems and Adata Technology Co 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.| Adata Technology vs. Taiwan Semiconductor Manufacturing | Adata Technology vs. MediaTek | Adata Technology vs. United Microelectronics | Adata Technology vs. Novatek Microelectronics Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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