Correlation Between Cirmaker Technology and Analog Devices

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

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

Diversification Opportunities for Cirmaker Technology and Analog Devices

0.18

Correlation Coefficient

Cirmaker Technology  Analog Devices

Average diversification

The 3 months correlation between Cirmaker and Analog is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cirmaker Technology and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Cirmaker Technology 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 Cirmaker Technology are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Cirmaker Technology i.e., Cirmaker Technology and Analog Devices go up and down completely randomly.

Pair Corralation between Cirmaker Technology and Analog Devices

Given the investment horizon of 90 days Cirmaker Technology is expected to generate 1.51 times more return on investment than Analog Devices. However, Cirmaker Technology is 1.51 times more volatile than Analog Devices. It trades about 0.13 of its potential returns per unit of risk. Analog Devices is currently generating about -0.01 per unit of risk. If you would invest  4.50  in Cirmaker Technology on October 22, 2024 and sell it today you would earn a total of  0.90  from holding Cirmaker Technology or generate 20.0% return on investment over 90 days.

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

Cirmaker Technology  vs.  Analog Devices

Cirmaker Technology

Risk-Adjusted Performance

10 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cirmaker Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward-looking signals, Cirmaker Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Cirmaker Technology and Analog Devices

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

The idea behind Cirmaker Technology and Analog Devices 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .