Correlation Between Advanced Energy and STL Technology
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and STL 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 Advanced Energy and STL Technology 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 STL Technology Co, you can compare the effects of market volatilities on Advanced Energy and STL 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 Advanced Energy with a short position of STL Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and STL Technology.
Diversification Opportunities for Advanced Energy and STL Technology
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Advanced and STL is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Solution and STL Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STL Technology 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 STL Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STL Technology has no effect on the direction of Advanced Energy i.e., Advanced Energy and STL Technology go up and down completely randomly.
Pair Corralation between Advanced Energy and STL Technology
Assuming the 90 days trading horizon Advanced Energy is expected to generate 1.12 times less return on investment than STL Technology. In addition to that, Advanced Energy is 1.01 times more volatile than STL Technology Co. It trades about 0.55 of its total potential returns per unit of risk. STL Technology Co is currently generating about 0.63 per unit of volatility. If you would invest 3,395 in STL Technology Co on September 1, 2024 and sell it today you would earn a total of 2,655 from holding STL Technology Co or generate 78.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Advanced Energy Solution vs. STL Technology Co
Performance |
| Timeline |
| Advanced Energy Solution |
| STL Technology |
Advanced Energy and STL Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and STL Technology
The main advantage of trading using opposite Advanced Energy and STL Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, STL 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 STL Technology will offset losses from the drop in STL Technology's long position.| Advanced Energy vs. Walsin Lihwa Corp | Advanced Energy vs. Voltronic Power Technology | Advanced Energy vs. Simplo Technology Co | Advanced Energy vs. Ta Ya Electric |
| STL Technology vs. Simplo Technology Co | STL Technology vs. Dynapack International Technology | STL Technology vs. Celxpert Energy | STL Technology vs. C Tech United |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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