Correlation Between Aten International and Advantech

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

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

Diversification Opportunities for Aten International and Advantech

0.06

Correlation Coefficient

Aten International  Advantech

Significant diversification

The 3 months correlation between Aten and Advantech is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aten International Co and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and Aten International 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 Aten International Co are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of Aten International i.e., Aten International and Advantech go up and down completely randomly.

Pair Corralation between Aten International and Advantech

Assuming the 90 days trading horizon Aten International Co is expected to under-perform the Advantech. But the stock apears to be less risky and, when comparing its historical volatility, Aten International Co is 4.48 times less risky than Advantech. The stock trades about -0.06 of its potential returns per unit of risk. The Advantech Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  32,400  in Advantech Co on September 4, 2024 and sell it today you would earn a total of  2,300  from holding Advantech Co or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Aten International Co  vs.  Advantech Co

Aten International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aten International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aten International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Advantech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aten International and Advantech

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

The idea behind Aten International Co and Advantech Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..