Correlation Between Eguana Technologies and Advanced Energy

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

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

Diversification Opportunities for Eguana Technologies and Advanced Energy

0.35

Correlation Coefficient

Eguana Technologies  Advanced Energy

Weak diversification

The 3 months correlation between Eguana and Advanced is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eguana Technologies and Advanced Energy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Energy Indu and Eguana Technologies 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 Eguana Technologies are associated (or correlated) with Advanced Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Energy Indu has no effect on the direction of Eguana Technologies i.e., Eguana Technologies and Advanced Energy go up and down completely randomly.

Pair Corralation between Eguana Technologies and Advanced Energy

Assuming the 90 days horizon Eguana Technologies is expected to generate 6.41 times more return on investment than Advanced Energy. However, Eguana Technologies is 6.41 times more volatile than Advanced Energy Industries. It trades about 0.09 of its potential returns per unit of risk. Advanced Energy Industries is currently generating about -0.08 per unit of risk. If you would invest  1.00  in Eguana Technologies on December 30, 2024 and sell it today you would lose (0.15) from holding Eguana Technologies or give up 15.0% of portfolio value over 90 days.

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

Eguana Technologies  vs.  Advanced Energy Industries

Eguana Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eguana Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Eguana Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Advanced Energy Indu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Energy Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Eguana Technologies and Advanced Energy

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

The idea behind Eguana Technologies and Advanced Energy Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.