Correlation Between Applied Films and Analog Devices

Can any of the company-specific risk be diversified away by investing in both Applied Films and Analog Devices 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 Analog Devices 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 Analog Devices, you can compare the effects of market volatilities on Applied Films and Analog Devices 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 Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Films and Analog Devices.

Diversification Opportunities for Applied Films and Analog Devices

0.0

Correlation Coefficient

Applied Films  Analog Devices

Pay attention - limited upside

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

Pair Corralation between Applied Films and Analog Devices

If you would invest  18,851  in Analog Devices on January 18, 2024 and sell it today you would earn a total of  92.00  from holding Analog Devices or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Applied Films Corp  vs.  Analog Devices

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 current stock price disturbance, may contribute to short-term losses for the investors.

Analog Devices

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Applied Films and Analog Devices

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

The idea behind Applied Films Corp and Analog Devices 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.