Correlation Between Advantech and Phison Electronics
Can any of the company-specific risk be diversified away by investing in both Advantech and Phison Electronics 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 Phison Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantech Co and Phison Electronics, you can compare the effects of market volatilities on Advantech and Phison Electronics 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 Phison Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantech and Phison Electronics.
Diversification Opportunities for Advantech and Phison Electronics
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advantech and Phison is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Advantech Co and Phison Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phison Electronics 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 Phison Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phison Electronics has no effect on the direction of Advantech i.e., Advantech and Phison Electronics go up and down completely randomly.
Pair Corralation between Advantech and Phison Electronics
Assuming the 90 days trading horizon Advantech Co is expected to generate 0.59 times more return on investment than Phison Electronics. However, Advantech Co is 1.7 times less risky than Phison Electronics. It trades about 0.22 of its potential returns per unit of risk. Phison Electronics is currently generating about -0.07 per unit of risk. If you would invest 32,000 in Advantech Co on August 31, 2024 and sell it today you would earn a total of 2,250 from holding Advantech Co or generate 7.03% 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. Phison Electronics
Performance |
| Timeline |
| Advantech |
| Phison Electronics |
Advantech and Phison Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantech and Phison Electronics
The main advantage of trading using opposite Advantech and Phison Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantech position performs unexpectedly, Phison Electronics 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 Phison Electronics will offset losses from the drop in Phison Electronics' long position.| Advantech vs. Delta Electronics | Advantech vs. Quanta Computer | Advantech vs. Realtek Semiconductor Corp | Advantech vs. President Chain Store |
| Phison Electronics vs. Syscom Computer Engineering | Phison Electronics vs. Voltronic Power Technology | Phison Electronics vs. Tehmag Foods | Phison Electronics vs. Great Computer |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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