Correlation Between General Interface and Advantech

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

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

Diversification Opportunities for General Interface and Advantech

-0.46

Correlation Coefficient

General Interface  Advantech

Very good diversification

The 3 months correlation between General and Advantech is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding General Interface Solution and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and General Interface 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 General Interface Solution 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 General Interface i.e., General Interface and Advantech go up and down completely randomly.

Pair Corralation between General Interface and Advantech

Assuming the 90 days trading horizon General Interface Solution is expected to under-perform the Advantech. In addition to that, General Interface is 1.03 times more volatile than Advantech Co. It trades about -0.11 of its total potential returns per unit of risk. Advantech Co is currently generating about 0.12 per unit of volatility. If you would invest  32,350  in Advantech Co on September 5, 2024 and sell it today you would earn a total of  3,650  from holding Advantech Co or generate 11.28% return on investment over 90 days.

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

General Interface Solution  vs.  Advantech Co

General Interface

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Interface Solution has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Advantech

Risk-Adjusted Performance

9 of 100

OK

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 General Interface and Advantech

The main advantage of trading using opposite General Interface and Advantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Interface 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 General Interface Solution 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.