Correlation Between Advtech and Oceana
Can any of the company-specific risk be diversified away by investing in both Advtech and Oceana 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 Oceana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advtech and Oceana, you can compare the effects of market volatilities on Advtech and Oceana 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 Oceana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advtech and Oceana.
Diversification Opportunities for Advtech and Oceana
Very weak diversification
The 3 months correlation between Advtech and Oceana is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Advtech and Oceana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceana 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 Oceana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceana has no effect on the direction of Advtech i.e., Advtech and Oceana go up and down completely randomly.
Pair Corralation between Advtech and Oceana
Assuming the 90 days trading horizon Advtech is expected to generate 1.05 times more return on investment than Oceana. However, Advtech is 1.05 times more volatile than Oceana. It trades about 0.13 of its potential returns per unit of risk. Oceana is currently generating about -0.03 per unit of risk. If you would invest 263,700 in Advtech on September 3, 2024 and sell it today you would earn a total of 65,500 from holding Advtech or generate 24.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advtech vs. Oceana
Performance |
| Timeline |
| Advtech |
| Oceana |
Advtech and Oceana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advtech and Oceana
The main advantage of trading using opposite Advtech and Oceana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advtech position performs unexpectedly, Oceana 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 Oceana will offset losses from the drop in Oceana's long position.| Advtech vs. Sasol Ltd Bee | Advtech vs. Centaur Bci Balanced | Advtech vs. Growthpoint Properties | Advtech vs. Coronation Global Equity |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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