Correlation Between Advanced Energy and BH Global

Can any of the company-specific risk be diversified away by investing in both Advanced Energy and BH Global 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 BH Global 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 BH Global, you can compare the effects of market volatilities on Advanced Energy and BH Global 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 BH Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and BH Global.

Diversification Opportunities for Advanced Energy and BH Global

-0.49

Correlation Coefficient

Advanced Energy  BH Global

Very good diversification

The 3 months correlation between Advanced and 911608 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Solution and BH Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Global 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 BH Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Global has no effect on the direction of Advanced Energy i.e., Advanced Energy and BH Global go up and down completely randomly.

Pair Corralation between Advanced Energy and BH Global

Assuming the 90 days trading horizon Advanced Energy Solution is expected to under-perform the BH Global. In addition to that, Advanced Energy is 3.12 times more volatile than BH Global. It trades about -0.13 of its total potential returns per unit of risk. BH Global is currently generating about -0.08 per unit of volatility. If you would invest  358.00  in BH Global on December 5, 2024 and sell it today you would lose (8.00) from holding BH Global or give up 2.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Advanced Energy Solution  vs.  BH Global

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 fairly stable basic indicators, Advanced Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BH Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BH Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BH Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Energy and BH Global

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

The idea behind Advanced Energy Solution and BH Global 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.