Correlation Between Advanced Energy and Sports Gear
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and Sports Gear 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 Sports Gear 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 Sports Gear Co, you can compare the effects of market volatilities on Advanced Energy and Sports Gear 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 Sports Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and Sports Gear.
Diversification Opportunities for Advanced Energy and Sports Gear
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advanced and Sports is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Solution and Sports Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Gear 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 Sports Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Gear has no effect on the direction of Advanced Energy i.e., Advanced Energy and Sports Gear go up and down completely randomly.
Pair Corralation between Advanced Energy and Sports Gear
Assuming the 90 days trading horizon Advanced Energy is expected to generate 1.02 times less return on investment than Sports Gear. But when comparing it to its historical volatility, Advanced Energy Solution is 1.14 times less risky than Sports Gear. It trades about 0.26 of its potential returns per unit of risk. Sports Gear Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 8,690 in Sports Gear Co on August 31, 2024 and sell it today you would earn a total of 5,260 from holding Sports Gear Co or generate 60.53% 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. Sports Gear Co
Performance |
| Timeline |
| Advanced Energy Solution |
| Sports Gear |
Advanced Energy and Sports Gear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and Sports Gear
The main advantage of trading using opposite Advanced Energy and Sports Gear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, Sports Gear 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 Sports Gear will offset losses from the drop in Sports Gear's long position.| Advanced Energy vs. Nan Ya Printed | Advanced Energy vs. Lotes Co | Advanced Energy vs. eMemory Technology | Advanced Energy vs. Alchip Technologies |
| Sports Gear vs. Feng Tay Enterprises | Sports Gear vs. Pou Chen Corp | Sports Gear vs. Fulgent Sun International | Sports Gear vs. Taiwan Paiho |
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 CEOs Directory module to screen CEOs from public companies around the world.
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