Correlation Between Advanced Power and Advanced Analog
Can any of the company-specific risk be diversified away by investing in both Advanced Power and Advanced Analog 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 Power and Advanced Analog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Power Electronics and Advanced Analog Technology, you can compare the effects of market volatilities on Advanced Power and Advanced Analog 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 Power with a short position of Advanced Analog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Power and Advanced Analog.
Diversification Opportunities for Advanced Power and Advanced Analog
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advanced and Advanced is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Power Electronics and Advanced Analog Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Analog Tech and Advanced Power 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 Power Electronics are associated (or correlated) with Advanced Analog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Analog Tech has no effect on the direction of Advanced Power i.e., Advanced Power and Advanced Analog go up and down completely randomly.
Pair Corralation between Advanced Power and Advanced Analog
Assuming the 90 days trading horizon Advanced Power Electronics is expected to generate 0.7 times more return on investment than Advanced Analog. However, Advanced Power Electronics is 1.43 times less risky than Advanced Analog. It trades about 0.51 of its potential returns per unit of risk. Advanced Analog Technology is currently generating about 0.22 per unit of risk. If you would invest 8,080 in Advanced Power Electronics on November 28, 2024 and sell it today you would earn a total of 1,270 from holding Advanced Power Electronics or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Advanced Power Electronics vs. Advanced Analog Technology
Performance |
| Timeline |
| Advanced Power Elect |
| Advanced Analog Tech |
Advanced Power and Advanced Analog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Power and Advanced Analog
The main advantage of trading using opposite Advanced Power and Advanced Analog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Power position performs unexpectedly, Advanced Analog 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 Advanced Analog will offset losses from the drop in Advanced Analog's long position.| Advanced Power vs. Pan Jit International | Advanced Power vs. Global Mixed Mode Technology | Advanced Power vs. Sitronix Technology Corp | Advanced Power vs. Nuvoton Technology Corp |
| Advanced Analog vs. Tait Marketing Distribution | Advanced Analog vs. Shian Yih Electronic | Advanced Analog vs. C Media Electronics | Advanced Analog 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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