Correlation Between Advent Technologies and Tokyo Electric
Can any of the company-specific risk be diversified away by investing in both Advent Technologies and Tokyo Electric 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 Advent Technologies and Tokyo Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advent Technologies Holdings and Tokyo Electric Power, you can compare the effects of market volatilities on Advent Technologies and Tokyo Electric 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 Advent Technologies with a short position of Tokyo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Technologies and Tokyo Electric.
Diversification Opportunities for Advent Technologies and Tokyo Electric
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advent and Tokyo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Advent Technologies Holdings and Tokyo Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electric Power and Advent Technologies 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 Advent Technologies Holdings are associated (or correlated) with Tokyo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electric Power has no effect on the direction of Advent Technologies i.e., Advent Technologies and Tokyo Electric go up and down completely randomly.
Pair Corralation between Advent Technologies and Tokyo Electric
Assuming the 90 days horizon Advent Technologies Holdings is expected to generate 3.26 times more return on investment than Tokyo Electric. However, Advent Technologies is 3.26 times more volatile than Tokyo Electric Power. It trades about 0.28 of its potential returns per unit of risk. Tokyo Electric Power is currently generating about -0.01 per unit of risk. If you would invest 0.81 in Advent Technologies Holdings on October 25, 2024 and sell it today you would earn a total of 0.78 from holding Advent Technologies Holdings or generate 96.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Advent Technologies Holdings vs. Tokyo Electric Power
Performance |
| Timeline |
| Advent Technologies |
| Tokyo Electric Power |
Advent Technologies and Tokyo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Technologies and Tokyo Electric
The main advantage of trading using opposite Advent Technologies and Tokyo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Technologies position performs unexpectedly, Tokyo Electric 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 Tokyo Electric will offset losses from the drop in Tokyo Electric's long position.The idea behind Advent Technologies Holdings and Tokyo Electric Power pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tokyo Electric vs. Alternus Energy Group | Tokyo Electric vs. First National Energy | Tokyo Electric vs. Brookfield Renewable Partners |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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