Correlation Between ADC Therapeutics and Advanced Energy

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

By analyzing existing cross correlation between ADC Therapeutics SA and Advanced Energy Industries, you can compare the effects of market volatilities on ADC Therapeutics and Advanced Energy 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 ADC Therapeutics with a short position of Advanced Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADC Therapeutics and Advanced Energy.

Diversification Opportunities for ADC Therapeutics and Advanced Energy

0.54

Correlation Coefficient

ADC Therapeutics  Advanced Energy

Very weak diversification

The 3 months correlation between ADC and Advanced is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ADC Therapeutics SA and Advanced Energy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Energy Indu and ADC Therapeutics 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 ADC Therapeutics SA are associated (or correlated) with Advanced Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Energy Indu has no effect on the direction of ADC Therapeutics i.e., ADC Therapeutics and Advanced Energy go up and down completely randomly.

Pair Corralation between ADC Therapeutics and Advanced Energy

Given the investment horizon of 90 days ADC Therapeutics SA is expected to generate 4.49 times more return on investment than Advanced Energy. However, ADC Therapeutics is 4.49 times more volatile than Advanced Energy Industries. It trades about 0.19 of its potential returns per unit of risk. Advanced Energy Industries is currently generating about 0.24 per unit of risk. If you would invest  127.00  in ADC Therapeutics SA on May 9, 2025 and sell it today you would earn a total of  137.00  from holding ADC Therapeutics SA or generate 107.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ADC Therapeutics SA  vs.  Advanced Energy Industries

ADC Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADC Therapeutics SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, ADC Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Advanced Energy Indu

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Energy Industries are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, Advanced Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADC Therapeutics and Advanced Energy

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

The idea behind ADC Therapeutics SA and Advanced Energy Industries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.