Correlation Between Analog Integrations and Advanced Echem

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

By analyzing existing cross correlation between Analog Integrations and Advanced Echem Materials, you can compare the effects of market volatilities on Analog Integrations and Advanced Echem 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 Analog Integrations with a short position of Advanced Echem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Integrations and Advanced Echem.

Diversification Opportunities for Analog Integrations and Advanced Echem

0.22

Correlation Coefficient

Analog Integrations  Advanced Echem

Modest diversification

The 3 months correlation between Analog and Advanced is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Analog Integrations and Advanced Echem Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Echem Materials and Analog Integrations 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 Analog Integrations are associated (or correlated) with Advanced Echem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Echem Materials has no effect on the direction of Analog Integrations i.e., Analog Integrations and Advanced Echem go up and down completely randomly.

Pair Corralation between Analog Integrations and Advanced Echem

Assuming the 90 days trading horizon Analog Integrations is expected to under-perform the Advanced Echem. In addition to that, Analog Integrations is 1.09 times more volatile than Advanced Echem Materials. It trades about -0.34 of its total potential returns per unit of risk. Advanced Echem Materials is currently generating about -0.31 per unit of volatility. If you would invest  68,700  in Advanced Echem Materials on October 12, 2024 and sell it today you would lose (6,900) from holding Advanced Echem Materials or give up 10.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Analog Integrations  vs.  Advanced Echem Materials

Analog Integrations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Integrations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Advanced Echem Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Echem Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Advanced Echem is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Analog Integrations and Advanced Echem

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

The idea behind Analog Integrations and Advanced Echem Materials 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.