Correlation Between ADLINK Technology and BenQ Materials
Can any of the company-specific risk be diversified away by investing in both ADLINK Technology and BenQ Materials 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 ADLINK Technology and BenQ Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADLINK Technology and BenQ Materials Corp, you can compare the effects of market volatilities on ADLINK Technology and BenQ Materials 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 ADLINK Technology with a short position of BenQ Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADLINK Technology and BenQ Materials.
Diversification Opportunities for ADLINK Technology and BenQ Materials
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ADLINK and BenQ is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ADLINK Technology and BenQ Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Materials Corp and ADLINK 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 ADLINK Technology are associated (or correlated) with BenQ Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Materials Corp has no effect on the direction of ADLINK Technology i.e., ADLINK Technology and BenQ Materials go up and down completely randomly.
Pair Corralation between ADLINK Technology and BenQ Materials
Assuming the 90 days trading horizon ADLINK Technology is expected to generate 1.75 times more return on investment than BenQ Materials. However, ADLINK Technology is 1.75 times more volatile than BenQ Materials Corp. It trades about 0.04 of its potential returns per unit of risk. BenQ Materials Corp is currently generating about -0.01 per unit of risk. If you would invest 5,900 in ADLINK Technology on September 1, 2024 and sell it today you would earn a total of 1,450 from holding ADLINK Technology or generate 24.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADLINK Technology vs. BenQ Materials Corp
Performance |
| Timeline |
| ADLINK Technology |
| BenQ Materials Corp |
ADLINK Technology and BenQ Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADLINK Technology and BenQ Materials
The main advantage of trading using opposite ADLINK Technology and BenQ Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADLINK Technology position performs unexpectedly, BenQ Materials 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 BenQ Materials will offset losses from the drop in BenQ Materials' long position.| ADLINK Technology vs. CKM Building Material | ADLINK Technology vs. Cowealth Medical Holding | ADLINK Technology vs. Level Biotechnology | ADLINK Technology vs. Nankang Rubber Tire |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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