Correlation Between Advanced Information and Principal Capital
Can any of the company-specific risk be diversified away by investing in both Advanced Information and Principal Capital 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 Principal Capital 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 Principal Capital Public, you can compare the effects of market volatilities on Advanced Information and Principal Capital 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 Principal Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Information and Principal Capital.
Diversification Opportunities for Advanced Information and Principal Capital
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advanced and Principal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and Principal Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Capital 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 Principal Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Capital Public has no effect on the direction of Advanced Information i.e., Advanced Information and Principal Capital go up and down completely randomly.
Pair Corralation between Advanced Information and Principal Capital
Assuming the 90 days trading horizon Advanced Information Technology is expected to generate 1.0 times more return on investment than Principal Capital. However, Advanced Information Technology is 1.0 times less risky than Principal Capital. It trades about 0.04 of its potential returns per unit of risk. Principal Capital Public is currently generating about 0.04 per unit of risk. If you would invest 551.00 in Advanced Information Technology on September 2, 2024 and sell it today you would lose (119.00) from holding Advanced Information Technology or give up 21.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Information Technolog vs. Principal Capital Public
Performance |
| Timeline |
| Advanced Information |
| Principal Capital Public |
Advanced Information and Principal Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Information and Principal Capital
The main advantage of trading using opposite Advanced Information and Principal Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Information position performs unexpectedly, Principal Capital 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 Principal Capital will offset losses from the drop in Principal Capital's long position.| Advanced Information vs. AP Public | Advanced Information vs. Jasmine International Public | Advanced Information vs. Asia Plus Group | Advanced Information vs. Bangchak Public |
| Principal Capital vs. AP Public | Principal Capital vs. Advanced Information Technology | Principal Capital vs. AJ Plast Public | Principal Capital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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