Correlation Between Cal Comp and Advantech

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

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

Diversification Opportunities for Cal Comp and Advantech

0.8

Correlation Coefficient

Cal Comp  Advantech

Very poor diversification

The 3 months correlation between Cal and Advantech is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cal Comp Electronics Public and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and Cal Comp 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 Cal Comp Electronics Public 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 Cal Comp i.e., Cal Comp and Advantech go up and down completely randomly.

Pair Corralation between Cal Comp and Advantech

Assuming the 90 days trading horizon Cal Comp Electronics Public is expected to under-perform the Advantech. In addition to that, Cal Comp is 1.32 times more volatile than Advantech Co. It trades about -0.08 of its total potential returns per unit of risk. Advantech Co is currently generating about 0.2 per unit of volatility. If you would invest  34,850  in Advantech Co on October 25, 2024 and sell it today you would earn a total of  3,050  from holding Advantech Co or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Cal Comp Electronics Public  vs.  Advantech Co

Cal Comp Electronics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Comp Electronics Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cal Comp showed solid returns over the last few months and may actually be approaching a breakup point.

Advantech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cal Comp and Advantech

The main advantage of trading using opposite Cal Comp and Advantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal Comp 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 Cal Comp Electronics Public 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.