Correlation Between Advanced Energy and Voltronic Power
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and Voltronic Power 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 Voltronic Power 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 Voltronic Power Technology, you can compare the effects of market volatilities on Advanced Energy and Voltronic Power 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 Voltronic Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and Voltronic Power.
Diversification Opportunities for Advanced Energy and Voltronic Power
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Voltronic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Solution and Voltronic Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltronic Power Tech 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 Voltronic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltronic Power Tech has no effect on the direction of Advanced Energy i.e., Advanced Energy and Voltronic Power go up and down completely randomly.
Pair Corralation between Advanced Energy and Voltronic Power
Assuming the 90 days trading horizon Advanced Energy Solution is expected to generate 1.57 times more return on investment than Voltronic Power. However, Advanced Energy is 1.57 times more volatile than Voltronic Power Technology. It trades about 0.56 of its potential returns per unit of risk. Voltronic Power Technology is currently generating about -0.16 per unit of risk. If you would invest 51,800 in Advanced Energy Solution on August 28, 2024 and sell it today you would earn a total of 30,900 from holding Advanced Energy Solution or generate 59.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Energy Solution vs. Voltronic Power Technology
Performance |
| Timeline |
| Advanced Energy Solution |
| Voltronic Power Tech |
Advanced Energy and Voltronic Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and Voltronic Power
The main advantage of trading using opposite Advanced Energy and Voltronic Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, Voltronic Power 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 Voltronic Power will offset losses from the drop in Voltronic Power's long position.| Advanced Energy vs. Walsin Lihwa Corp | Advanced Energy vs. Ta Ya Electric | Advanced Energy vs. Hiwin Mikrosystem Corp | Advanced Energy vs. Amtran Technology Co |
| Voltronic Power vs. Walsin Lihwa Corp | Voltronic Power vs. Ta Ya Electric | Voltronic Power vs. Hiwin Mikrosystem Corp | Voltronic Power vs. Amtran Technology Co |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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