Correlation Between Advanced Micro and EMCORE

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

Diversification Opportunities for Advanced Micro and EMCORE

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Advanced and EMCORE is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE 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 EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Advanced Micro i.e., Advanced Micro and EMCORE go up and down completely randomly.

Pair Corralation between Advanced Micro and EMCORE

Considering the 90-day investment horizon Advanced Micro Devices is expected to generate 0.92 times more return on investment than EMCORE. However, Advanced Micro Devices is 1.09 times less risky than EMCORE. It trades about 0.03 of its potential returns per unit of risk. EMCORE is currently generating about -0.25 per unit of risk. If you would invest  17,800  in Advanced Micro Devices on December 29, 2023 and sell it today you would earn a total of  159.00  from holding Advanced Micro Devices or generate 0.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Advanced Micro Devices  vs.  EMCORE

 Performance 
       Timeline  
Advanced Micro Devices 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Advanced Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.
EMCORE 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days EMCORE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Advanced Micro and EMCORE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advanced Micro and EMCORE

The main advantage of trading using opposite Advanced Micro and EMCORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro position performs unexpectedly, EMCORE 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 EMCORE will offset losses from the drop in EMCORE's long position.
The idea behind Advanced Micro Devices and EMCORE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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