Correlation Between Advanced Information and Mega Lifesciences
Can any of the company-specific risk be diversified away by investing in both Advanced Information and Mega Lifesciences 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 Information and Mega Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Information Technology and Mega Lifesciences Public, you can compare the effects of market volatilities on Advanced Information and Mega Lifesciences 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 Information with a short position of Mega Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Information and Mega Lifesciences.
Diversification Opportunities for Advanced Information and Mega Lifesciences
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Advanced and Mega is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and Mega Lifesciences Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Lifesciences Public and Advanced Information 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 Information Technology are associated (or correlated) with Mega Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Lifesciences Public has no effect on the direction of Advanced Information i.e., Advanced Information and Mega Lifesciences go up and down completely randomly.
Pair Corralation between Advanced Information and Mega Lifesciences
Assuming the 90 days trading horizon Advanced Information Technology is expected to generate 1.06 times more return on investment than Mega Lifesciences. However, Advanced Information is 1.06 times more volatile than Mega Lifesciences Public. It trades about 0.08 of its potential returns per unit of risk. Mega Lifesciences Public is currently generating about -0.25 per unit of risk. If you would invest 420.00 in Advanced Information Technology on September 2, 2024 and sell it today you would earn a total of 12.00 from holding Advanced Information Technology or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Information Technolog vs. Mega Lifesciences Public
Performance |
| Timeline |
| Advanced Information |
| Mega Lifesciences Public |
Advanced Information and Mega Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Information and Mega Lifesciences
The main advantage of trading using opposite Advanced Information and Mega Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Information position performs unexpectedly, Mega Lifesciences 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 Mega Lifesciences will offset losses from the drop in Mega Lifesciences' long position.| Advanced Information vs. AP Public | Advanced Information vs. Jasmine International Public | Advanced Information vs. Asia Plus Group | Advanced Information vs. Bangchak Public |
| Mega Lifesciences vs. AP Public | Mega Lifesciences vs. Advanced Information Technology | Mega Lifesciences vs. AJ Plast Public | Mega Lifesciences vs. Berli Jucker 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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