Correlation Between Advantech and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Advantech and Asia Electronic 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 Asia Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantech Co and Asia Electronic Material, you can compare the effects of market volatilities on Advantech and Asia Electronic 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 Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantech and Asia Electronic.
Diversification Opportunities for Advantech and Asia Electronic
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advantech and Asia is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Advantech Co and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material 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 Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Advantech i.e., Advantech and Asia Electronic go up and down completely randomly.
Pair Corralation between Advantech and Asia Electronic
Assuming the 90 days trading horizon Advantech Co is expected to under-perform the Asia Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Advantech Co is 1.44 times less risky than Asia Electronic. The stock trades about -0.01 of its potential returns per unit of risk. The Asia Electronic Material is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,790 in Asia Electronic Material on August 26, 2024 and sell it today you would earn a total of 235.00 from holding Asia Electronic Material or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.69% |
| Values | Daily Returns |
Advantech Co vs. Asia Electronic Material
Performance |
| Timeline |
| Advantech |
| Asia Electronic Material |
Advantech and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantech and Asia Electronic
The main advantage of trading using opposite Advantech and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantech position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic's long position.| Advantech vs. Novatek Microelectronics Corp | Advantech vs. Quanta Computer | Advantech vs. United Microelectronics |
| Asia Electronic vs. Advantech Co | Asia Electronic vs. IEI Integration Corp | Asia Electronic vs. Flytech Technology Co | Asia Electronic vs. ADLINK Technology |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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