Correlation Between Power Solution and AJ Advance
Can any of the company-specific risk be diversified away by investing in both Power Solution and AJ Advance 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 Power Solution and AJ Advance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Solution Technologies and AJ Advance Technology, you can compare the effects of market volatilities on Power Solution and AJ Advance 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 Power Solution with a short position of AJ Advance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Solution and AJ Advance.
Diversification Opportunities for Power Solution and AJ Advance
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Power and AJA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Power Solution Technologies and AJ Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Advance Technology and Power Solution 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 Power Solution Technologies are associated (or correlated) with AJ Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Advance Technology has no effect on the direction of Power Solution i.e., Power Solution and AJ Advance go up and down completely randomly.
Pair Corralation between Power Solution and AJ Advance
Assuming the 90 days trading horizon Power Solution Technologies is expected to generate 0.36 times more return on investment than AJ Advance. However, Power Solution Technologies is 2.79 times less risky than AJ Advance. It trades about 0.06 of its potential returns per unit of risk. AJ Advance Technology is currently generating about -0.05 per unit of risk. If you would invest 46.00 in Power Solution Technologies on December 6, 2024 and sell it today you would earn a total of 1.00 from holding Power Solution Technologies or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Power Solution Technologies vs. AJ Advance Technology
Performance |
| Timeline |
| Power Solution Techn |
| AJ Advance Technology |
Power Solution and AJ Advance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Solution and AJ Advance
The main advantage of trading using opposite Power Solution and AJ Advance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Solution position performs unexpectedly, AJ Advance 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 AJ Advance will offset losses from the drop in AJ Advance's long position.| Power Solution vs. Super Energy | Power Solution vs. WHA Public | Power Solution vs. Siri Prime Office | Power Solution vs. Ananda Development Public |
| AJ Advance vs. Aqua Public | AJ Advance vs. Advanced Connection | AJ Advance vs. Ekarat Engineering Public | AJ Advance vs. Eternal Energy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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