Correlation Between Indorama Ventures and Advanced Info

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Can any of the company-specific risk be diversified away by investing in both Indorama Ventures and Advanced Info 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 Indorama Ventures and Advanced Info into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indorama Ventures PCL and Advanced Info Service, you can compare the effects of market volatilities on Indorama Ventures and Advanced Info 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 Indorama Ventures with a short position of Advanced Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Ventures and Advanced Info.

Diversification Opportunities for Indorama Ventures and Advanced Info

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Indorama and Advanced is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Ventures PCL and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service and Indorama Ventures 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 Indorama Ventures PCL are associated (or correlated) with Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Indorama Ventures i.e., Indorama Ventures and Advanced Info go up and down completely randomly.

Pair Corralation between Indorama Ventures and Advanced Info

Assuming the 90 days trading horizon Indorama Ventures PCL is expected to under-perform the Advanced Info. In addition to that, Indorama Ventures is 1.43 times more volatile than Advanced Info Service. It trades about -0.07 of its total potential returns per unit of risk. Advanced Info Service is currently generating about 0.13 per unit of volatility. If you would invest  27,500  in Advanced Info Service on September 1, 2024 and sell it today you would earn a total of  1,000.00  from holding Advanced Info Service or generate 3.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Indorama Ventures PCL  vs.  Advanced Info Service

 Performance 
       Timeline  
Indorama Ventures PCL 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Indorama Ventures PCL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Indorama Ventures disclosed solid returns over the last few months and may actually be approaching a breakup point.
Advanced Info Service 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Advanced Info sustained solid returns over the last few months and may actually be approaching a breakup point.

Indorama Ventures and Advanced Info Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Indorama Ventures and Advanced Info

The main advantage of trading using opposite Indorama Ventures and Advanced Info positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Ventures position performs unexpectedly, Advanced Info 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 Advanced Info will offset losses from the drop in Advanced Info's long position.
The idea behind Indorama Ventures PCL and Advanced Info Service pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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