Correlation Between Ardiden and Advantest

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

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

Diversification Opportunities for Ardiden and Advantest

-0.49

Correlation Coefficient

Ardiden  Advantest

Very good diversification

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

Pair Corralation between Ardiden and Advantest

Assuming the 90 days horizon Ardiden Limited is expected to generate 14.37 times more return on investment than Advantest. However, Ardiden is 14.37 times more volatile than Advantest. It trades about 0.04 of its potential returns per unit of risk. Advantest is currently generating about 0.1 per unit of risk. If you would invest  0.40  in Ardiden Limited on September 17, 2024 and sell it today you would earn a total of  0.14  from holding Ardiden Limited or generate 35.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	67.67%
Values	Daily Returns

Ardiden Limited  vs.  Advantest

Ardiden Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardiden Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Advantest

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Advantest are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Advantest reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ardiden and Advantest

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

The idea behind Ardiden Limited and Advantest 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.