Correlation Between Advanced Micro and Socket Mobile

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

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

Diversification Opportunities for Advanced Micro and Socket Mobile

0.68

Correlation Coefficient

Advanced Micro  Socket Mobile

Poor diversification

The 3 months correlation between Advanced and Socket is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Socket Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socket Mobile and Advanced Micro 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 Micro Devices are associated (or correlated) with Socket Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socket Mobile has no effect on the direction of Advanced Micro i.e., Advanced Micro and Socket Mobile go up and down completely randomly.

Pair Corralation between Advanced Micro and Socket Mobile

Considering the 90-day investment horizon Advanced Micro Devices is expected to under-perform the Socket Mobile. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Micro Devices is 1.38 times less risky than Socket Mobile. The stock trades about -0.09 of its potential returns per unit of risk. The Socket Mobile is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  132.00  in Socket Mobile on December 28, 2024 and sell it today you would lose (19.00) from holding Socket Mobile or give up 14.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Advanced Micro Devices  vs.  Socket Mobile

Advanced Micro Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Socket Mobile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Socket Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Advanced Micro and Socket Mobile

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

The idea behind Advanced Micro Devices and Socket Mobile 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.