Correlation Between Ilika Plc and Advanced Energy

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

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

Diversification Opportunities for Ilika Plc and Advanced Energy

-0.16

Correlation Coefficient

Ilika Plc  Advanced Energy

Good diversification

The 3 months correlation between Ilika and Advanced is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ilika plc 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 Ilika Plc 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 Ilika plc 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 Ilika Plc i.e., Ilika Plc and Advanced Energy go up and down completely randomly.

Pair Corralation between Ilika Plc and Advanced Energy

Assuming the 90 days horizon Ilika plc is expected to generate 1.9 times more return on investment than Advanced Energy. However, Ilika Plc is 1.9 times more volatile than Advanced Energy Industries. It trades about 0.2 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  26.00  in Ilika plc on December 29, 2024 and sell it today you would earn a total of  23.00  from holding Ilika plc or generate 88.46% return on investment over 90 days.

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

Ilika plc  vs.  Advanced Energy Industries

Ilika plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ilika plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Ilika Plc 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 Ilika Plc and Advanced Energy

The main advantage of trading using opposite Ilika Plc and Advanced Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilika Plc 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 Ilika plc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.