Correlation Between Agere Systems and Advanced Analogic

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

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

Diversification Opportunities for Agere Systems and Advanced Analogic

0.0

Correlation Coefficient

Agere Systems  Advanced Analogic

Pay attention - limited upside

The 3 months correlation between Agere and Advanced is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Agere Systems and Advanced Analogic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Analogic and Agere Systems 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 Agere Systems 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 Agere Systems i.e., Agere Systems and Advanced Analogic go up and down completely randomly.

Pair Corralation between Agere Systems and Advanced Analogic

If you would invest (100.00) in Advanced Analogic Technologies on January 25, 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

Agere Systems  vs.  Advanced Analogic Technologies

Agere Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agere Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Agere Systems is not utilizing all of its potentials. The current 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 Agere Systems and Advanced Analogic

The main advantage of trading using opposite Agere Systems and Advanced Analogic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agere Systems 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 Agere Systems 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.