Correlation Between IEI Integration and Advantech

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

By analyzing existing cross correlation between IEI Integration Corp and Advantech Co, you can compare the effects of market volatilities on IEI Integration and Advantech 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 IEI Integration with a short position of Advantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of IEI Integration and Advantech.

Diversification Opportunities for IEI Integration and Advantech

0.64

Correlation Coefficient

IEI Integration  Advantech

Poor diversification

The 3 months correlation between IEI and Advantech is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding IEI Integration Corp and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and IEI Integration 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 IEI Integration Corp are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of IEI Integration i.e., IEI Integration and Advantech go up and down completely randomly.

Pair Corralation between IEI Integration and Advantech

Assuming the 90 days trading horizon IEI Integration is expected to generate 1.06 times less return on investment than Advantech. In addition to that, IEI Integration is 1.28 times more volatile than Advantech Co. It trades about 0.01 of its total potential returns per unit of risk. Advantech Co is currently generating about 0.02 per unit of volatility. If you would invest  33,650  in Advantech Co on September 5, 2024 and sell it today you would earn a total of  2,550  from holding Advantech Co or generate 7.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

IEI Integration Corp  vs.  Advantech Co

IEI Integration Corp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IEI Integration Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, IEI Integration may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Advantech

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IEI Integration and Advantech

The main advantage of trading using opposite IEI Integration and Advantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IEI Integration position performs unexpectedly, Advantech 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 Advantech will offset losses from the drop in Advantech's long position.

The idea behind IEI Integration Corp and Advantech Co 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.