Correlation Between Advanced Micro and ARB
Can any of the company-specific risk be diversified away by investing in both Advanced Micro and ARB 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 Micro and ARB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and ARB Limited, you can compare the effects of market volatilities on Advanced Micro and ARB 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 Micro with a short position of ARB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and ARB.
Diversification Opportunities for Advanced Micro and ARB
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advanced and ARB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and ARB Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARB Limited and Advanced Micro 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 Micro Devices are associated (or correlated) with ARB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARB Limited has no effect on the direction of Advanced Micro i.e., Advanced Micro and ARB go up and down completely randomly.
Pair Corralation between Advanced Micro and ARB
Considering the 90-day investment horizon Advanced Micro Devices is expected to generate 2.39 times more return on investment than ARB. However, Advanced Micro is 2.39 times more volatile than ARB Limited. It trades about 0.06 of its potential returns per unit of risk. ARB Limited is currently generating about 0.07 per unit of risk. If you would invest 6,386 in Advanced Micro Devices on September 12, 2024 and sell it today you would earn a total of 6,388 from holding Advanced Micro Devices or generate 100.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 70.91% |
| Values | Daily Returns |
Advanced Micro Devices vs. ARB Limited
Performance |
| Timeline |
| Advanced Micro Devices |
| ARB Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Advanced Micro and ARB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and ARB
The main advantage of trading using opposite Advanced Micro and ARB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro position performs unexpectedly, ARB 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 ARB will offset losses from the drop in ARB's long position.| Advanced Micro vs. NVIDIA | Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Micron Technology | Advanced Micro vs. Qualcomm Incorporated |
| ARB vs. GAMCO Global Gold | ARB vs. Advanced Micro Devices | ARB vs. STMicroelectronics NV ADR | ARB vs. Amkor Technology |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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