Correlation Between Advanced Info and Forth Smart

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

By analyzing existing cross correlation between Advanced Info Service and Forth Smart Service, you can compare the effects of market volatilities on Advanced Info and Forth Smart 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 Info with a short position of Forth Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Info and Forth Smart.

Diversification Opportunities for Advanced Info and Forth Smart

0.85

Correlation Coefficient

Advanced Info  Forth Smart

Very poor diversification

The 3 months correlation between Advanced and Forth is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service and Forth Smart Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forth Smart Service and Advanced Info 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 Info Service are associated (or correlated) with Forth Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forth Smart Service has no effect on the direction of Advanced Info i.e., Advanced Info and Forth Smart go up and down completely randomly.

Pair Corralation between Advanced Info and Forth Smart

Assuming the 90 days trading horizon Advanced Info Service is expected to generate 0.36 times more return on investment than Forth Smart. However, Advanced Info Service is 2.79 times less risky than Forth Smart. It trades about 0.01 of its potential returns per unit of risk. Forth Smart Service is currently generating about -0.07 per unit of risk. If you would invest  20,261  in Advanced Info Service on February 7, 2024 and sell it today you would earn a total of  439.00  from holding Advanced Info Service or generate 2.17% return on investment over 90 days.

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

Advanced Info Service  vs.  Forth Smart Service

Advanced Info Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Info Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Advanced Info is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Forth Smart Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forth Smart Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Advanced Info and Forth Smart

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

The idea behind Advanced Info Service and Forth Smart 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.