Correlation Between Advanced Energy and C Tech
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and C Tech 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 Energy and C Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Energy Solution and C Tech United, you can compare the effects of market volatilities on Advanced Energy and C Tech 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 Energy with a short position of C Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and C Tech.
Diversification Opportunities for Advanced Energy and C Tech
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advanced and 3625 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Solution and C Tech United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Tech United and Advanced Energy 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 Energy Solution are associated (or correlated) with C Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Tech United has no effect on the direction of Advanced Energy i.e., Advanced Energy and C Tech go up and down completely randomly.
Pair Corralation between Advanced Energy and C Tech
Assuming the 90 days trading horizon Advanced Energy Solution is expected to generate 0.83 times more return on investment than C Tech. However, Advanced Energy Solution is 1.2 times less risky than C Tech. It trades about 0.67 of its potential returns per unit of risk. C Tech United is currently generating about 0.38 per unit of risk. If you would invest 50,300 in Advanced Energy Solution on September 4, 2024 and sell it today you would earn a total of 46,500 from holding Advanced Energy Solution or generate 92.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Energy Solution vs. C Tech United
Performance |
| Timeline |
| Advanced Energy Solution |
| C Tech United |
Advanced Energy and C Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and C Tech
The main advantage of trading using opposite Advanced Energy and C Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, C Tech 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 C Tech will offset losses from the drop in C Tech's long position.| Advanced Energy vs. Nan Ya Printed | Advanced Energy vs. Lotes Co | Advanced Energy vs. eMemory Technology | Advanced Energy vs. Alchip Technologies |
| C Tech vs. WT Microelectronics Co | C Tech vs. Bright Led Electronics | C Tech vs. Formosa Electronic Industries | C Tech vs. Lelon Electronics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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