Correlation Between Advtech and Afristrat Investment

Can any of the company-specific risk be diversified away by investing in both Advtech and Afristrat Investment 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 Advtech and Afristrat Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advtech and Afristrat Investment Holdings, you can compare the effects of market volatilities on Advtech and Afristrat Investment 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 Advtech with a short position of Afristrat Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advtech and Afristrat Investment.

Diversification Opportunities for Advtech and Afristrat Investment

0.0

Correlation Coefficient

Advtech  Afristrat Investment

Pay attention - limited upside

The 3 months correlation between Advtech and Afristrat is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Advtech and Afristrat Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afristrat Investment and Advtech 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 Advtech are associated (or correlated) with Afristrat Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afristrat Investment has no effect on the direction of Advtech i.e., Advtech and Afristrat Investment go up and down completely randomly.

Pair Corralation between Advtech and Afristrat Investment

If you would invest  1,200  in Afristrat Investment Holdings on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Afristrat Investment Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Advtech  vs.  Afristrat Investment Holdings

Advtech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advtech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, Advtech is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Afristrat Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afristrat Investment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, Afristrat Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Advtech and Afristrat Investment

The main advantage of trading using opposite Advtech and Afristrat Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advtech position performs unexpectedly, Afristrat Investment 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 Afristrat Investment will offset losses from the drop in Afristrat Investment's long position.

The idea behind Advtech and Afristrat Investment Holdings 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.

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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 Stocks Directory module to find actively traded stocks across global markets.