Correlation Between Advantest and Teradyne
Can any of the company-specific risk be diversified away by investing in both Advantest and Teradyne 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 Advantest and Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantest and Teradyne, you can compare the effects of market volatilities on Advantest and Teradyne 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 Advantest with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantest and Teradyne.
Diversification Opportunities for Advantest and Teradyne
Modest diversification
The 3 months correlation between Advantest and Teradyne is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Advantest and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Advantest 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 Advantest are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Advantest i.e., Advantest and Teradyne go up and down completely randomly.
Pair Corralation between Advantest and Teradyne
Assuming the 90 days horizon Advantest is expected to generate 1.4 times more return on investment than Teradyne. However, Advantest is 1.4 times more volatile than Teradyne. It trades about -0.08 of its potential returns per unit of risk. Teradyne is currently generating about -0.12 per unit of risk. If you would invest 6,250 in Advantest on November 3, 2024 and sell it today you would lose (537.00) from holding Advantest or give up 8.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantest vs. Teradyne
Performance |
| Timeline |
| Advantest |
| Teradyne |
Advantest and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantest and Teradyne
The main advantage of trading using opposite Advantest and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantest position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| Advantest vs. Tokyo Electron | Advantest vs. Ultra Clean Holdings | Advantest vs. Applied Materials | Advantest vs. Sumco Corp ADR |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |