Correlation Between Shangri La and Advanced Information
Can any of the company-specific risk be diversified away by investing in both Shangri La and Advanced Information 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 Shangri La and Advanced Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shangri La Hotel Public and Advanced Information Technology, you can compare the effects of market volatilities on Shangri La and Advanced Information 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 Shangri La with a short position of Advanced Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Advanced Information.
Diversification Opportunities for Shangri La and Advanced Information
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shangri and Advanced is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotel Public and Advanced Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Information and Shangri La 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 Shangri La Hotel Public are associated (or correlated) with Advanced Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Information has no effect on the direction of Shangri La i.e., Shangri La and Advanced Information go up and down completely randomly.
Pair Corralation between Shangri La and Advanced Information
Assuming the 90 days trading horizon Shangri La Hotel Public is expected to generate 1.41 times more return on investment than Advanced Information. However, Shangri La is 1.41 times more volatile than Advanced Information Technology. It trades about 0.06 of its potential returns per unit of risk. Advanced Information Technology is currently generating about 0.04 per unit of risk. If you would invest 5,681 in Shangri La Hotel Public on October 23, 2024 and sell it today you would lose (1,256) from holding Shangri La Hotel Public or give up 22.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shangri La Hotel Public vs. Advanced Information Technolog
Performance |
| Timeline |
| Shangri La Hotel |
| Advanced Information |
Shangri La and Advanced Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shangri La and Advanced Information
The main advantage of trading using opposite Shangri La and Advanced Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La position performs unexpectedly, Advanced Information 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 Information will offset losses from the drop in Advanced Information's long position.| Shangri La vs. Eastern Commercial Leasing | Shangri La vs. Micro Leasing Public | Shangri La vs. Digital Telecommunications Infrastructure | Shangri La vs. President Automobile Industries |
| Advanced Information vs. AP Public | Advanced Information vs. Jasmine International Public | Advanced Information vs. Asia Plus Group | Advanced Information vs. Bangchak 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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