Correlation Between Analog Devices and Corsair Gaming

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

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

Diversification Opportunities for Analog Devices and Corsair Gaming

-0.12

Correlation Coefficient

Analog Devices  Corsair Gaming

Good diversification

The 3 months correlation between Analog and Corsair is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming 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 Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Analog Devices i.e., Analog Devices and Corsair Gaming go up and down completely randomly.

Pair Corralation between Analog Devices and Corsair Gaming

Considering the 90-day investment horizon Analog Devices is expected to generate 0.66 times more return on investment than Corsair Gaming. However, Analog Devices is 1.51 times less risky than Corsair Gaming. It trades about 0.04 of its potential returns per unit of risk. Corsair Gaming is currently generating about -0.03 per unit of risk. If you would invest  16,013  in Analog Devices on October 9, 2024 and sell it today you would earn a total of  5,787  from holding Analog Devices or generate 36.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Analog Devices  vs.  Corsair Gaming

Analog Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Devices has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Corsair Gaming

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corsair Gaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Corsair Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analog Devices and Corsair Gaming

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

The idea behind Analog Devices and Corsair Gaming 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.