Correlation Between Advanced International and Giant Manufacturing
Can any of the company-specific risk be diversified away by investing in both Advanced International and Giant Manufacturing 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 International and Giant Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced International Multitech and Giant Manufacturing Co, you can compare the effects of market volatilities on Advanced International and Giant Manufacturing 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 International with a short position of Giant Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced International and Giant Manufacturing.
Diversification Opportunities for Advanced International and Giant Manufacturing
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Advanced and Giant is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Advanced International Multite and Giant Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giant Manufacturing and Advanced International 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 International Multitech are associated (or correlated) with Giant Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giant Manufacturing has no effect on the direction of Advanced International i.e., Advanced International and Giant Manufacturing go up and down completely randomly.
Pair Corralation between Advanced International and Giant Manufacturing
Assuming the 90 days trading horizon Advanced International Multitech is expected to generate 0.5 times more return on investment than Giant Manufacturing. However, Advanced International Multitech is 1.99 times less risky than Giant Manufacturing. It trades about 0.02 of its potential returns per unit of risk. Giant Manufacturing Co is currently generating about -0.02 per unit of risk. If you would invest 7,020 in Advanced International Multitech on August 29, 2024 and sell it today you would earn a total of 420.00 from holding Advanced International Multitech or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced International Multite vs. Giant Manufacturing Co
Performance |
| Timeline |
| Advanced International |
| Giant Manufacturing |
Advanced International and Giant Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced International and Giant Manufacturing
The main advantage of trading using opposite Advanced International and Giant Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced International position performs unexpectedly, Giant Manufacturing 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 Giant Manufacturing will offset losses from the drop in Giant Manufacturing's long position.| Advanced International vs. Feng Tay Enterprises | Advanced International vs. Ruentex Materials Co | Advanced International vs. Symtek Automation Asia | Advanced International vs. CTCI Corp |
| Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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