Correlation Between Advanced Micro and Global Ship

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Can any of the company-specific risk be diversified away by investing in both Advanced Micro and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on Advanced Micro and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Global Ship.

Diversification Opportunities for Advanced Micro and Global Ship

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Advanced and Global is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Advanced Micro i.e., Advanced Micro and Global Ship go up and down completely randomly.

Pair Corralation between Advanced Micro and Global Ship

Considering the 90-day investment horizon Advanced Micro Devices is expected to generate 3.18 times more return on investment than Global Ship. However, Advanced Micro is 3.18 times more volatile than Global Ship Lease. It trades about 0.04 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of risk. If you would invest  10,935  in Advanced Micro Devices on August 26, 2024 and sell it today you would earn a total of  2,900  from holding Advanced Micro Devices or generate 26.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Advanced Micro Devices  vs.  Global Ship Lease

 Performance 
       Timeline  
Advanced Micro Devices 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Advanced Micro is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Global Ship Lease 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advanced Micro and Global Ship Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advanced Micro and Global Ship

The main advantage of trading using opposite Advanced Micro and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.
The idea behind Advanced Micro Devices and Global Ship Lease 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.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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