Correlation Between Advanced Analog and Allied Industrial
Can any of the company-specific risk be diversified away by investing in both Advanced Analog and Allied Industrial 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 Analog and Allied Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Analog Technology and Allied Industrial, you can compare the effects of market volatilities on Advanced Analog and Allied Industrial 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 Analog with a short position of Allied Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Analog and Allied Industrial.
Diversification Opportunities for Advanced Analog and Allied Industrial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Allied is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Analog Technology and Allied Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Industrial and Advanced Analog 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 Analog Technology are associated (or correlated) with Allied Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Industrial has no effect on the direction of Advanced Analog i.e., Advanced Analog and Allied Industrial go up and down completely randomly.
Pair Corralation between Advanced Analog and Allied Industrial
Assuming the 90 days trading horizon Advanced Analog Technology is expected to generate 2.38 times more return on investment than Allied Industrial. However, Advanced Analog is 2.38 times more volatile than Allied Industrial. It trades about 0.01 of its potential returns per unit of risk. Allied Industrial is currently generating about -0.02 per unit of risk. If you would invest 6,754 in Advanced Analog Technology on September 12, 2024 and sell it today you would earn a total of 146.00 from holding Advanced Analog Technology or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Analog Technology vs. Allied Industrial
Performance |
| Timeline |
| Advanced Analog Tech |
| Allied Industrial |
Advanced Analog and Allied Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Analog and Allied Industrial
The main advantage of trading using opposite Advanced Analog and Allied Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Analog position performs unexpectedly, Allied Industrial 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 Allied Industrial will offset losses from the drop in Allied Industrial's long position.| Advanced Analog vs. GeneReach Biotechnology | Advanced Analog vs. Emerging Display Technologies | Advanced Analog vs. Cameo Communications | Advanced Analog vs. Level Biotechnology |
| Allied Industrial vs. Delta Electronics | Allied Industrial vs. Ruentex Development Co | Allied Industrial vs. WiseChip Semiconductor | Allied Industrial vs. Novatek Microelectronics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Transaction History View history of all your transactions and understand their impact on performance |