Correlation Between Anam Electronics and Solution Advanced

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

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

Diversification Opportunities for Anam Electronics and Solution Advanced

0.21

Correlation Coefficient

Anam Electronics  Solution Advanced

Modest diversification

The 3 months correlation between Anam and Solution is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Anam Electronics Co and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced and Anam Electronics 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 Anam Electronics Co are associated (or correlated) with Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of Anam Electronics i.e., Anam Electronics and Solution Advanced go up and down completely randomly.

Pair Corralation between Anam Electronics and Solution Advanced

Assuming the 90 days trading horizon Anam Electronics Co is expected to under-perform the Solution Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Anam Electronics Co is 1.24 times less risky than Solution Advanced. The stock trades about -0.04 of its potential returns per unit of risk. The Solution Advanced Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  145,700  in Solution Advanced Technology on September 4, 2024 and sell it today you would earn a total of  6,900  from holding Solution Advanced Technology or generate 4.74% return on investment over 90 days.

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

Anam Electronics Co  vs.  Solution Advanced Technology

Anam Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anam Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Anam Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Solution Advanced

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Solution Advanced Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Solution Advanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Anam Electronics and Solution Advanced

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

The idea behind Anam Electronics Co and Solution Advanced Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.