Correlation Between ADLINK Technology and Information Technology
Can any of the company-specific risk be diversified away by investing in both ADLINK Technology and Information 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 ADLINK Technology and Information Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADLINK Technology and Information Technology Total, you can compare the effects of market volatilities on ADLINK Technology and Information 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 ADLINK Technology with a short position of Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADLINK Technology and Information Technology.
Diversification Opportunities for ADLINK Technology and Information Technology
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ADLINK and Information is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ADLINK Technology and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology and ADLINK Technology 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 ADLINK Technology are associated (or correlated) with Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of ADLINK Technology i.e., ADLINK Technology and Information Technology go up and down completely randomly.
Pair Corralation between ADLINK Technology and Information Technology
Assuming the 90 days trading horizon ADLINK Technology is expected to generate 1.28 times more return on investment than Information Technology. However, ADLINK Technology is 1.28 times more volatile than Information Technology Total. It trades about 0.0 of its potential returns per unit of risk. Information Technology Total is currently generating about -0.02 per unit of risk. If you would invest 7,550 in ADLINK Technology on January 25, 2025 and sell it today you would lose (400.00) from holding ADLINK Technology or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADLINK Technology vs. Information Technology Total
Performance |
| Timeline |
| ADLINK Technology |
| Information Technology |
ADLINK Technology and Information Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADLINK Technology and Information Technology
The main advantage of trading using opposite ADLINK Technology and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADLINK Technology position performs unexpectedly, Information 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 Information Technology will offset losses from the drop in Information Technology's long position.| ADLINK Technology vs. Intai Technology | ADLINK Technology vs. Arima Communications Corp | ADLINK Technology vs. Connection Technology Systems | ADLINK Technology vs. Asia Metal Industries |
| Information Technology vs. Wistron Corp | Information Technology vs. Wistron NeWeb Corp | Information Technology vs. Pegatron Corp | Information Technology vs. Dimerco Data System |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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