Correlation Between Advanced Micro and Ziff Davis

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

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

Diversification Opportunities for Advanced Micro and Ziff Davis

-0.63

Correlation Coefficient

Advanced Micro  Ziff Davis

Excellent diversification

The 3 months correlation between Advanced and Ziff is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Ziff Davis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ziff Davis and Advanced Micro 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 Advanced Micro Devices are associated (or correlated) with Ziff Davis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ziff Davis has no effect on the direction of Advanced Micro i.e., Advanced Micro and Ziff Davis go up and down completely randomly.

Pair Corralation between Advanced Micro and Ziff Davis

Considering the 90-day investment horizon Advanced Micro is expected to generate 6.16 times less return on investment than Ziff Davis. But when comparing it to its historical volatility, Advanced Micro Devices is 1.07 times less risky than Ziff Davis. It trades about 0.02 of its potential returns per unit of risk. Ziff Davis is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,700  in Ziff Davis on September 5, 2024 and sell it today you would earn a total of  1,183  from holding Ziff Davis or generate 25.17% return on investment over 90 days.

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

Advanced Micro Devices  vs.  Ziff Davis

Advanced Micro Devices

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Advanced Micro is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Ziff Davis

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Micro and Ziff Davis

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

The idea behind Advanced Micro Devices and Ziff Davis 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.