Correlation Between Advanced Info and Digital Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Advanced Info and Digital Telecommunicatio 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 Info and Digital Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Info Service and Digital Telecommunications Infrastructure, you can compare the effects of market volatilities on Advanced Info and Digital Telecommunicatio 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 Info with a short position of Digital Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Info and Digital Telecommunicatio.
Diversification Opportunities for Advanced Info and Digital Telecommunicatio
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advanced and Digital is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and Digital Telecommunications Inf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Telecommunicatio and Advanced Info 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 Info Service are associated (or correlated) with Digital Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Telecommunicatio has no effect on the direction of Advanced Info i.e., Advanced Info and Digital Telecommunicatio go up and down completely randomly.
Pair Corralation between Advanced Info and Digital Telecommunicatio
Assuming the 90 days trading horizon Advanced Info Service is expected to generate 1.68 times more return on investment than Digital Telecommunicatio. However, Advanced Info is 1.68 times more volatile than Digital Telecommunications Infrastructure. It trades about 0.22 of its potential returns per unit of risk. Digital Telecommunications Infrastructure is currently generating about -0.08 per unit of risk. If you would invest 27,100 in Advanced Info Service on August 28, 2024 and sell it today you would earn a total of 1,700 from holding Advanced Info Service or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Info Service vs. Digital Telecommunications Inf
Performance |
| Timeline |
| Advanced Info Service |
| Digital Telecommunicatio |
Advanced Info and Digital Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Info and Digital Telecommunicatio
The main advantage of trading using opposite Advanced Info and Digital Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Info position performs unexpectedly, Digital Telecommunicatio 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 Digital Telecommunicatio will offset losses from the drop in Digital Telecommunicatio's long position.| Advanced Info vs. PTT Public | Advanced Info vs. CP ALL Public | Advanced Info vs. Kasikornbank Public | Advanced Info vs. Bangkok Bank Public |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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