Correlation Between Advanced Micro and Globalfoundries
Can any of the company-specific risk be diversified away by investing in both Advanced Micro and Globalfoundries 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 Globalfoundries 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 Globalfoundries, you can compare the effects of market volatilities on Advanced Micro and Globalfoundries 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 Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Globalfoundries.
Diversification Opportunities for Advanced Micro and Globalfoundries
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Globalfoundries is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Advanced Micro i.e., Advanced Micro and Globalfoundries go up and down completely randomly.
Pair Corralation between Advanced Micro and Globalfoundries
Considering the 90-day investment horizon Advanced Micro Devices is expected to under-perform the Globalfoundries. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Micro Devices is 1.58 times less risky than Globalfoundries. The stock trades about -0.14 of its potential returns per unit of risk. The Globalfoundries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,837 in Globalfoundries on August 24, 2024 and sell it today you would earn a total of 363.00 from holding Globalfoundries or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Advanced Micro Devices vs. Globalfoundries
Performance |
| Timeline |
| Advanced Micro Devices |
| Globalfoundries |
Advanced Micro and Globalfoundries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Globalfoundries
The main advantage of trading using opposite Advanced Micro and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro position performs unexpectedly, Globalfoundries 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 Globalfoundries will offset losses from the drop in Globalfoundries' long position.| Advanced Micro vs. Eshallgo Class A | Advanced Micro vs. Amtech Systems | Advanced Micro vs. Gold Fields Ltd | Advanced Micro vs. Aegean Airlines SA |
| Globalfoundries vs. Eshallgo Class A | Globalfoundries vs. Amtech Systems | Globalfoundries vs. Gold Fields Ltd | Globalfoundries vs. Aegean Airlines SA |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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