Correlation Between AP Public and Advanced Information

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

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

Diversification Opportunities for AP Public and Advanced Information

-0.36

Correlation Coefficient

AP Public  Advanced Information

Very good diversification

The 3 months correlation between AP Public and Advanced is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AP 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 AP Public 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 AP 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 AP Public i.e., AP Public and Advanced Information go up and down completely randomly.

Pair Corralation between AP Public and Advanced Information

Assuming the 90 days horizon AP Public is expected to under-perform the Advanced Information. In addition to that, AP Public is 1.22 times more volatile than Advanced Information Technology. It trades about -0.02 of its total potential returns per unit of risk. Advanced Information Technology is currently generating about 0.18 per unit of volatility. If you would invest  414.00  in Advanced Information Technology on April 23, 2025 and sell it today you would earn a total of  91.00  from holding Advanced Information Technology or generate 21.98% return on investment over 90 days.

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

AP Public  vs.  Advanced Information Technolog

AP Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days AP Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, AP Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Advanced Information

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Information Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Advanced Information disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AP Public and Advanced Information

The main advantage of trading using opposite AP Public and Advanced Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Public 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.

The idea behind AP Public and Advanced Information Technology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.