Correlation Between Analog Devices and BAIYU Holdings

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

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

Diversification Opportunities for Analog Devices and BAIYU Holdings

0.0

Correlation Coefficient

Analog Devices  BAIYU Holdings

Pay attention - limited upside

The 3 months correlation between Analog and BAIYU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings and Analog Devices 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 Devices are associated (or correlated) with BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of Analog Devices i.e., Analog Devices and BAIYU Holdings go up and down completely randomly.

Pair Corralation between Analog Devices and BAIYU Holdings

If you would invest  20,687  in Analog Devices on December 18, 2024 and sell it today you would earn a total of  481.00  from holding Analog Devices or generate 2.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Analog Devices  vs.  BAIYU Holdings

Analog Devices

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

BAIYU Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BAIYU Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Analog Devices and BAIYU Holdings

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

The idea behind Analog Devices and BAIYU Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.