Correlation Between Arbor Technology and Advantech
Can any of the company-specific risk be diversified away by investing in both Arbor Technology and Advantech 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 Arbor Technology and Advantech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Technology and Advantech Co, you can compare the effects of market volatilities on Arbor Technology and Advantech 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 Arbor Technology with a short position of Advantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Technology and Advantech.
Diversification Opportunities for Arbor Technology and Advantech
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arbor and Advantech is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Technology and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and Arbor Technology 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 Arbor Technology are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of Arbor Technology i.e., Arbor Technology and Advantech go up and down completely randomly.
Pair Corralation between Arbor Technology and Advantech
Assuming the 90 days trading horizon Arbor Technology is expected to generate 1.66 times more return on investment than Advantech. However, Arbor Technology is 1.66 times more volatile than Advantech Co. It trades about 0.29 of its potential returns per unit of risk. Advantech Co is currently generating about 0.3 per unit of risk. 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 |
Arbor Technology vs. Advantech Co
Performance |
| Timeline |
| Arbor Technology |
| Advantech |
Arbor Technology and Advantech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Technology and Advantech
The main advantage of trading using opposite Arbor Technology and Advantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Technology position performs unexpectedly, Advantech 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 Advantech will offset losses from the drop in Advantech's long position.| Arbor Technology vs. Advantech Co | Arbor Technology vs. Asustek Computer | Arbor Technology vs. Lite On Technology Corp | Arbor Technology vs. Micro Star International Co |
| Advantech vs. Novatek Microelectronics Corp | Advantech vs. Quanta Computer | Advantech vs. United Microelectronics |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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