Correlation Between Tokyo Electron and Advantest Corp

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

By analyzing existing cross correlation between Tokyo Electron and Advantest Corp DRC, you can compare the effects of market volatilities on Tokyo Electron and Advantest Corp 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 Tokyo Electron with a short position of Advantest Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Electron and Advantest Corp.

Diversification Opportunities for Tokyo Electron and Advantest Corp

-0.17

Correlation Coefficient

Tokyo Electron  Advantest Corp

Good diversification

The 3 months correlation between Tokyo and Advantest is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron and Advantest Corp DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantest Corp DRC and Tokyo Electron 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 Tokyo Electron are associated (or correlated) with Advantest Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantest Corp DRC has no effect on the direction of Tokyo Electron i.e., Tokyo Electron and Advantest Corp go up and down completely randomly.

Pair Corralation between Tokyo Electron and Advantest Corp

If you would invest  7,581  in Advantest Corp DRC on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Advantest Corp DRC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Tokyo Electron  vs.  Advantest Corp DRC

Tokyo Electron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokyo Electron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Tokyo Electron is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Advantest Corp DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advantest Corp DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Advantest Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tokyo Electron and Advantest Corp

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

The idea behind Tokyo Electron and Advantest Corp DRC 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.