Correlation Between Advanced Technology and Guangdong Silvere

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Can any of the company-specific risk be diversified away by investing in both Advanced Technology and Guangdong Silvere 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 Technology and Guangdong Silvere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Technology Materials and Guangdong Silvere Sci, you can compare the effects of market volatilities on Advanced Technology and Guangdong Silvere 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 Technology with a short position of Guangdong Silvere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Technology and Guangdong Silvere.

Diversification Opportunities for Advanced Technology and Guangdong Silvere

AdvancedGuangdongDiversified AwayAdvancedGuangdongDiversified Away100%
0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Advanced and Guangdong is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Technology Materials and Guangdong Silvere Sci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Silvere Sci and Advanced Technology 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 Technology Materials are associated (or correlated) with Guangdong Silvere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Silvere Sci has no effect on the direction of Advanced Technology i.e., Advanced Technology and Guangdong Silvere go up and down completely randomly.

Pair Corralation between Advanced Technology and Guangdong Silvere

Assuming the 90 days trading horizon Advanced Technology Materials is expected to generate 0.78 times more return on investment than Guangdong Silvere. However, Advanced Technology Materials is 1.29 times less risky than Guangdong Silvere. It trades about 0.08 of its potential returns per unit of risk. Guangdong Silvere Sci is currently generating about 0.03 per unit of risk. If you would invest  891.00  in Advanced Technology Materials on November 24, 2024 and sell it today you would earn a total of  345.00  from holding Advanced Technology Materials or generate 38.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Advanced Technology Materials  vs.  Guangdong Silvere Sci

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-5051015
JavaScript chart by amCharts 3.21.15000969 300221
       Timeline  
Advanced Technology 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Advanced Technology Materials 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10.51111.51212.51313.51414.5
Guangdong Silvere Sci 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Silvere Sci are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Silvere sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5.566.577.58

Advanced Technology and Guangdong Silvere Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.98-7.47-4.97-2.460.04172.485.047.6110.1712.74 0.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15000969 300221
       Returns  

Pair Trading with Advanced Technology and Guangdong Silvere

The main advantage of trading using opposite Advanced Technology and Guangdong Silvere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Technology position performs unexpectedly, Guangdong Silvere 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 Guangdong Silvere will offset losses from the drop in Guangdong Silvere's long position.
The idea behind Advanced Technology Materials and Guangdong Silvere Sci 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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