Correlation Between Advantech and Arbor Technology
Can any of the company-specific risk be diversified away by investing in both Advantech and Arbor Technology 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 Arbor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantech Co and Arbor Technology, you can compare the effects of market volatilities on Advantech and Arbor Technology 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 Arbor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantech and Arbor Technology.
Diversification Opportunities for Advantech and Arbor Technology
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advantech and Arbor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Advantech Co and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor 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 Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of Advantech i.e., Advantech and Arbor Technology go up and down completely randomly.
Pair Corralation between Advantech and Arbor Technology
Assuming the 90 days trading horizon Advantech is expected to generate 1.61 times less return on investment than Arbor Technology. But when comparing it to its historical volatility, Advantech Co is 1.66 times less risky than Arbor Technology. It trades about 0.3 of its potential returns per unit of risk. Arbor Technology is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 4,085 in Arbor Technology on August 26, 2024 and sell it today you would earn a total of 650.00 from holding Arbor Technology or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantech Co vs. Arbor Technology
Performance |
| Timeline |
| Advantech |
| Arbor Technology |
Advantech and Arbor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantech and Arbor Technology
The main advantage of trading using opposite Advantech and Arbor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantech position performs unexpectedly, Arbor Technology 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 Arbor Technology will offset losses from the drop in Arbor Technology's long position.| Advantech vs. Novatek Microelectronics Corp | Advantech vs. Quanta Computer | Advantech vs. United Microelectronics |
| Arbor Technology vs. Advantech Co | Arbor Technology vs. Asustek Computer | Arbor Technology vs. Lite On Technology Corp | Arbor Technology vs. Micro Star International Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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