Correlation Between Valens and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Valens and Advanced Micro 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 Valens and Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valens and Advanced Micro Devices, you can compare the effects of market volatilities on Valens and Advanced Micro 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 Valens with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and Advanced Micro.
Diversification Opportunities for Valens and Advanced Micro
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valens and Advanced is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Valens 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 Valens are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Valens i.e., Valens and Advanced Micro go up and down completely randomly.
Pair Corralation between Valens and Advanced Micro
Considering the 90-day investment horizon Valens is expected to under-perform the Advanced Micro. But the stock apears to be less risky and, when comparing its historical volatility, Valens is 1.02 times less risky than Advanced Micro. The stock trades about -0.12 of its potential returns per unit of risk. The Advanced Micro Devices is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 11,844 in Advanced Micro Devices on January 16, 2025 and sell it today you would lose (2,315) from holding Advanced Micro Devices or give up 19.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valens vs. Advanced Micro Devices
Performance |
| Timeline |
| Valens |
| Advanced Micro Devices |
Valens and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valens and Advanced Micro
The main advantage of trading using opposite Valens and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.| Valens vs. Wolfspeed | Valens vs. GSI Technology | Valens vs. Lattice Semiconductor | Valens vs. ON Semiconductor |
| Advanced Micro vs. Ameritrans Capital Corp | Advanced Micro vs. MicroAlgo | Advanced Micro vs. Summa Silver Corp | Advanced Micro vs. Invesco California Value |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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