Correlation Between Advtech and AfroCentric Investment
Can any of the company-specific risk be diversified away by investing in both Advtech and AfroCentric Investment 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 Advtech and AfroCentric Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advtech and AfroCentric Investment Corp, you can compare the effects of market volatilities on Advtech and AfroCentric Investment 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 Advtech with a short position of AfroCentric Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advtech and AfroCentric Investment.
Diversification Opportunities for Advtech and AfroCentric Investment
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advtech and AfroCentric is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Advtech and AfroCentric Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfroCentric Investment and Advtech 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 Advtech are associated (or correlated) with AfroCentric Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfroCentric Investment has no effect on the direction of Advtech i.e., Advtech and AfroCentric Investment go up and down completely randomly.
Pair Corralation between Advtech and AfroCentric Investment
Assuming the 90 days trading horizon Advtech is expected to generate 0.18 times more return on investment than AfroCentric Investment. However, Advtech is 5.47 times less risky than AfroCentric Investment. It trades about 0.16 of its potential returns per unit of risk. AfroCentric Investment Corp is currently generating about -0.22 per unit of risk. If you would invest 318,500 in Advtech on September 5, 2024 and sell it today you would earn a total of 11,000 from holding Advtech or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advtech vs. AfroCentric Investment Corp
Performance |
| Timeline |
| Advtech |
| AfroCentric Investment |
Advtech and AfroCentric Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advtech and AfroCentric Investment
The main advantage of trading using opposite Advtech and AfroCentric Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advtech position performs unexpectedly, AfroCentric Investment 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 AfroCentric Investment will offset losses from the drop in AfroCentric Investment's long position.| Advtech vs. Deneb Investments | Advtech vs. Kumba Iron Ore | Advtech vs. Bytes Technology | Advtech vs. Allied Electronics |
| AfroCentric Investment vs. Bytes Technology | AfroCentric Investment vs. Astral Foods | AfroCentric Investment vs. Afine Investments | AfroCentric Investment vs. British American Tobacco |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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