Correlation Between Advanced Echem and Integrated Service
Can any of the company-specific risk be diversified away by investing in both Advanced Echem and Integrated Service 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 Echem and Integrated Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Echem Materials and Integrated Service Technology, you can compare the effects of market volatilities on Advanced Echem and Integrated Service 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 Echem with a short position of Integrated Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Echem and Integrated Service.
Diversification Opportunities for Advanced Echem and Integrated Service
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Integrated is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Echem Materials and Integrated Service Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Service and Advanced Echem 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 Echem Materials are associated (or correlated) with Integrated Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Service has no effect on the direction of Advanced Echem i.e., Advanced Echem and Integrated Service go up and down completely randomly.
Pair Corralation between Advanced Echem and Integrated Service
Assuming the 90 days trading horizon Advanced Echem is expected to generate 2.47 times less return on investment than Integrated Service. In addition to that, Advanced Echem is 2.12 times more volatile than Integrated Service Technology. It trades about 0.04 of its total potential returns per unit of risk. Integrated Service Technology is currently generating about 0.19 per unit of volatility. If you would invest 12,822 in Integrated Service Technology on November 28, 2024 and sell it today you would earn a total of 578.00 from holding Integrated Service Technology or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Echem Materials vs. Integrated Service Technology
Performance |
| Timeline |
| Advanced Echem Materials |
| Integrated Service |
Advanced Echem and Integrated Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Echem and Integrated Service
The main advantage of trading using opposite Advanced Echem and Integrated Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Echem position performs unexpectedly, Integrated Service 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 Integrated Service will offset losses from the drop in Integrated Service's long position.| Advanced Echem vs. Forest Water Environmental | Advanced Echem vs. International Games System | Advanced Echem vs. GameSparcs Co | Advanced Echem vs. Mayer Steel Pipe |
| Integrated Service vs. Tehmag Foods | Integrated Service vs. Far EasTone Telecommunications | Integrated Service vs. Wei Chuan Foods | Integrated Service vs. Feng Ching Metal |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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