Correlation Between Advantech and Lite On
Can any of the company-specific risk be diversified away by investing in both Advantech and Lite On 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 Advantech and Lite On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantech Co and Lite On Technology Corp, you can compare the effects of market volatilities on Advantech and Lite On 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 Advantech with a short position of Lite On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantech and Lite On.
Diversification Opportunities for Advantech and Lite On
Weak diversification
The 3 months correlation between Advantech and Lite is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Advantech Co and Lite On Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lite On Technology and Advantech 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 Advantech Co are associated (or correlated) with Lite On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lite On Technology has no effect on the direction of Advantech i.e., Advantech and Lite On go up and down completely randomly.
Pair Corralation between Advantech and Lite On
Assuming the 90 days trading horizon Advantech Co is expected to generate 0.71 times more return on investment than Lite On. However, Advantech Co is 1.41 times less risky than Lite On. It trades about 0.3 of its potential returns per unit of risk. Lite On Technology Corp is currently generating about 0.04 per unit of risk. If you would invest 31,600 in Advantech Co on August 30, 2024 and sell it today you would earn a total of 3,050 from holding Advantech Co or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantech Co vs. Lite On Technology Corp
Performance |
| Timeline |
| Advantech |
| Lite On Technology |
Advantech and Lite On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantech and Lite On
The main advantage of trading using opposite Advantech and Lite On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantech position performs unexpectedly, Lite On 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 Lite On will offset losses from the drop in Lite On's long position.| Advantech vs. Delta Electronics | Advantech vs. Quanta Computer | Advantech vs. Realtek Semiconductor Corp | Advantech vs. President Chain Store |
| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |