Correlation Between Applied Films and Advanced Analogic

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

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

Diversification Opportunities for Applied Films and Advanced Analogic

0.0

Correlation Coefficient

Applied Films  Advanced Analogic

Pay attention - limited upside

The 3 months correlation between Applied and Advanced is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Applied Films Corp and Advanced Analogic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Analogic and Applied Films 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 Applied Films Corp are associated (or correlated) with Advanced Analogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Analogic has no effect on the direction of Applied Films i.e., Applied Films and Advanced Analogic go up and down completely randomly.

Pair Corralation between Applied Films and Advanced Analogic

If you would invest (100.00) in Advanced Analogic Technologies on January 24, 2024 and sell it today you would earn a total of  100.00  from holding Advanced Analogic Technologies or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Applied Films Corp  vs.  Advanced Analogic Technologies

Applied Films Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Advanced Analogic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Analogic Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Advanced Analogic is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Applied Films and Advanced Analogic

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

The idea behind Applied Films Corp and Advanced Analogic Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.