Correlation Between Information Services and Advent Wireless

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

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

Diversification Opportunities for Information Services and Advent Wireless

-0.44

Correlation Coefficient

Information Services  Advent Wireless

Very good diversification

The 3 months correlation between Information and Advent is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Information Services and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless and Information Services 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 Information Services are associated (or correlated) with Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Information Services i.e., Information Services and Advent Wireless go up and down completely randomly.

Pair Corralation between Information Services and Advent Wireless

Assuming the 90 days trading horizon Information Services is expected to generate 0.5 times more return on investment than Advent Wireless. However, Information Services is 2.01 times less risky than Advent Wireless. It trades about 0.22 of its potential returns per unit of risk. Advent Wireless is currently generating about -0.07 per unit of risk. If you would invest  2,621  in Information Services on April 24, 2025 and sell it today you would earn a total of  539.00  from holding Information Services or generate 20.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Information Services  vs.  Advent Wireless

Information Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Information Services displayed solid returns over the last few months and may actually be approaching a breakup point.

Advent Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advent Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Information Services and Advent Wireless

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

The idea behind Information Services and Advent Wireless 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.