Correlation Between Advanced Energy and SES SA
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and SES SA 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 SES SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Energy Industries and SES SA, you can compare the effects of market volatilities on Advanced Energy and SES SA 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 SES SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and SES SA.
Diversification Opportunities for Advanced Energy and SES SA
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Advanced and SES is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Industries and SES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES SA 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 Industries are associated (or correlated) with SES SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES SA has no effect on the direction of Advanced Energy i.e., Advanced Energy and SES SA go up and down completely randomly.
Pair Corralation between Advanced Energy and SES SA
Given the investment horizon of 90 days Advanced Energy Industries is expected to generate 0.41 times more return on investment than SES SA. However, Advanced Energy Industries is 2.43 times less risky than SES SA. It trades about 0.04 of its potential returns per unit of risk. SES SA is currently generating about -0.02 per unit of risk. If you would invest 10,380 in Advanced Energy Industries on August 28, 2024 and sell it today you would earn a total of 1,355 from holding Advanced Energy Industries or generate 13.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 82.3% |
| Values | Daily Returns |
Advanced Energy Industries vs. SES SA
Performance |
| Timeline |
| Advanced Energy Indu |
| SES SA |
Advanced Energy and SES SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and SES SA
The main advantage of trading using opposite Advanced Energy and SES SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, SES SA 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 SES SA will offset losses from the drop in SES SA's long position.| Advanced Energy vs. MKS Instruments | Advanced Energy vs. Axcelis Technologies | Advanced Energy vs. Entegris | Advanced Energy 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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