Correlation Between Advanced Information and Crown Seal

Can any of the company-specific risk be diversified away by investing in both Advanced Information and Crown Seal 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 Crown Seal 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 Crown Seal Public, you can compare the effects of market volatilities on Advanced Information and Crown Seal 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 Crown Seal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Information and Crown Seal.

Diversification Opportunities for Advanced Information and Crown Seal

0.36

Correlation Coefficient

Advanced Information  Crown Seal

Weak diversification

The 3 months correlation between Advanced and Crown is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and Crown Seal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Seal 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 Crown Seal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Seal Public has no effect on the direction of Advanced Information i.e., Advanced Information and Crown Seal go up and down completely randomly.

Pair Corralation between Advanced Information and Crown Seal

Assuming the 90 days trading horizon Advanced Information is expected to generate 6.84 times less return on investment than Crown Seal. In addition to that, Advanced Information is 2.84 times more volatile than Crown Seal Public. It trades about 0.01 of its total potential returns per unit of risk. Crown Seal Public is currently generating about 0.17 per unit of volatility. If you would invest  4,550  in Crown Seal Public on September 16, 2024 and sell it today you would earn a total of  100.00  from holding Crown Seal Public or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Advanced Information Technolog  vs.  Crown Seal Public

Advanced Information

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Information Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Advanced Information is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Crown Seal Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Seal Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Crown Seal is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Advanced Information and Crown Seal

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

The idea behind Advanced Information Technology and Crown Seal Public 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.