Correlation Between Advanced Energy and CHO Pharma
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and CHO Pharma 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 CHO Pharma 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 CHO Pharma, you can compare the effects of market volatilities on Advanced Energy and CHO Pharma 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 CHO Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and CHO Pharma.
Diversification Opportunities for Advanced Energy and CHO Pharma
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Advanced and CHO is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Solution and CHO Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHO Pharma 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 CHO Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHO Pharma has no effect on the direction of Advanced Energy i.e., Advanced Energy and CHO Pharma go up and down completely randomly.
Pair Corralation between Advanced Energy and CHO Pharma
Assuming the 90 days trading horizon Advanced Energy Solution is expected to generate 1.82 times more return on investment than CHO Pharma. However, Advanced Energy is 1.82 times more volatile than CHO Pharma. It trades about 0.34 of its potential returns per unit of risk. CHO Pharma is currently generating about -0.08 per unit of risk. If you would invest 66,400 in Advanced Energy Solution on October 9, 2024 and sell it today you would earn a total of 50,100 from holding Advanced Energy Solution or generate 75.45% 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. CHO Pharma
Performance |
| Timeline |
| Advanced Energy Solution |
| CHO Pharma |
Advanced Energy and CHO Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and CHO Pharma
The main advantage of trading using opposite Advanced Energy and CHO Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, CHO Pharma 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 CHO Pharma will offset losses from the drop in CHO Pharma's long position.| Advanced Energy vs. Nan Ya Printed | Advanced Energy vs. Lotes Co | Advanced Energy vs. eMemory Technology | Advanced Energy vs. Alchip Technologies |
| CHO Pharma vs. Johnson Chemical Pharmaceutical | CHO Pharma vs. Dadi Early Childhood Education | CHO Pharma vs. Mechema Chemicals Int | CHO Pharma vs. Pacific Hospital Supply |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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