Correlation Between AVCON Information and Advanced Micro

Can any of the company-specific risk be diversified away by investing in both AVCON Information 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 AVCON Information and Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AVCON Information Tech and Advanced Micro Fabrication, you can compare the effects of market volatilities on AVCON Information 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 AVCON Information with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVCON Information and Advanced Micro.

Diversification Opportunities for AVCON Information and Advanced Micro

0.82

Correlation Coefficient

AVCON Information  Advanced Micro

Very poor diversification

The 3 months correlation between AVCON and Advanced is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AVCON Information Tech and Advanced Micro Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Fabri and AVCON Information 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 AVCON Information Tech 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 Fabri has no effect on the direction of AVCON Information i.e., AVCON Information and Advanced Micro go up and down completely randomly.

Pair Corralation between AVCON Information and Advanced Micro

Assuming the 90 days trading horizon AVCON Information Tech is expected to generate 2.05 times more return on investment than Advanced Micro. However, AVCON Information is 2.05 times more volatile than Advanced Micro Fabrication. It trades about 0.03 of its potential returns per unit of risk. Advanced Micro Fabrication is currently generating about -0.04 per unit of risk. If you would invest  484.00  in AVCON Information Tech on December 4, 2024 and sell it today you would earn a total of  14.00  from holding AVCON Information Tech or generate 2.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

AVCON Information Tech  vs.  Advanced Micro Fabrication

AVCON Information Tech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AVCON Information Tech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVCON Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Advanced Micro Fabri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Micro Fabrication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Advanced Micro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AVCON Information and Advanced Micro

The main advantage of trading using opposite AVCON Information and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVCON Information 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.

The idea behind AVCON Information Tech and Advanced Micro Fabrication 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.