Correlation Between Arbor Technology and ADLINK Technology
Can any of the company-specific risk be diversified away by investing in both Arbor Technology and ADLINK 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 Arbor Technology and ADLINK Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Technology and ADLINK Technology, you can compare the effects of market volatilities on Arbor Technology and ADLINK 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 Arbor Technology with a short position of ADLINK Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Technology and ADLINK Technology.
Diversification Opportunities for Arbor Technology and ADLINK Technology
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arbor and ADLINK is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Technology and ADLINK Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADLINK Technology 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 ADLINK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADLINK Technology has no effect on the direction of Arbor Technology i.e., Arbor Technology and ADLINK Technology go up and down completely randomly.
Pair Corralation between Arbor Technology and ADLINK Technology
Assuming the 90 days trading horizon Arbor Technology is expected to generate 1.1 times more return on investment than ADLINK Technology. However, Arbor Technology is 1.1 times more volatile than ADLINK Technology. It trades about 0.29 of its potential returns per unit of risk. ADLINK Technology is currently generating about 0.11 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. ADLINK Technology
Performance |
| Timeline |
| Arbor Technology |
| ADLINK Technology |
Arbor Technology and ADLINK Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Technology and ADLINK Technology
The main advantage of trading using opposite Arbor Technology and ADLINK Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Technology position performs unexpectedly, ADLINK 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 ADLINK Technology will offset losses from the drop in ADLINK Technology'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 |
| ADLINK Technology vs. Novatek Microelectronics Corp | ADLINK Technology vs. Quanta Computer | ADLINK Technology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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