Correlation Between TRON and Advanced Micro

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

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

Diversification Opportunities for TRON and Advanced Micro

-0.62

Correlation Coefficient

TRON  Advanced Micro

Excellent diversification

The 3 months correlation between TRON and Advanced is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and TRON 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 TRON are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of TRON i.e., TRON and Advanced Micro go up and down completely randomly.

Pair Corralation between TRON and Advanced Micro

Assuming the 90 days trading horizon TRON is expected to under-perform the Advanced Micro. In addition to that, TRON is 1.74 times more volatile than Advanced Micro Devices. It trades about -0.06 of its total potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.11 per unit of volatility. If you would invest  12,398  in Advanced Micro Devices on October 10, 2024 and sell it today you would lose (634.00) from holding Advanced Micro Devices or give up 5.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.82%
Values	Daily Returns

TRON  vs.  Advanced Micro Devices

TRON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Advanced Micro Devices

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TRON and Advanced Micro

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

The idea behind TRON and Advanced Micro 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.