Correlation Between Advanced Energy and P Duke

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

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

Diversification Opportunities for Advanced Energy and P Duke

0.03

Correlation Coefficient

Advanced Energy  P Duke

Significant diversification

The 3 months correlation between Advanced and 8109 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Solution and P Duke Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P Duke Technology and Advanced Energy 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 Advanced Energy Solution are associated (or correlated) with P Duke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P Duke Technology has no effect on the direction of Advanced Energy i.e., Advanced Energy and P Duke go up and down completely randomly.

Pair Corralation between Advanced Energy and P Duke

Assuming the 90 days trading horizon Advanced Energy Solution is expected to under-perform the P Duke. In addition to that, Advanced Energy is 3.78 times more volatile than P Duke Technology Co. It trades about -0.06 of its total potential returns per unit of risk. P Duke Technology Co is currently generating about -0.03 per unit of volatility. If you would invest  9,020  in P Duke Technology Co on December 30, 2024 and sell it today you would lose (210.00) from holding P Duke Technology Co or give up 2.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Advanced Energy Solution  vs.  P Duke Technology Co

Advanced Energy Solution

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Energy Solution 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

P Duke Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days P Duke Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, P Duke 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 Advanced Energy and P Duke

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

The idea behind Advanced Energy Solution and P Duke Technology 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 Global Correlations module to find global opportunities by holding instruments from different markets.