Correlation Between Advanced Micro and PDF Solutions

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

Diversification Opportunities for Advanced Micro and PDF Solutions

0.91

Correlation Coefficient

Advanced Micro  PDF Solutions

Almost no diversification

The 3 months correlation between Advanced and PDF is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and PDF Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDF Solutions 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 PDF Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDF Solutions has no effect on the direction of Advanced Micro i.e., Advanced Micro and PDF Solutions go up and down completely randomly.

Pair Corralation between Advanced Micro and PDF Solutions

Considering the 90-day investment horizon Advanced Micro Devices is expected to generate 1.06 times more return on investment than PDF Solutions. However, Advanced Micro is 1.06 times more volatile than PDF Solutions. It trades about 0.36 of its potential returns per unit of risk. PDF Solutions is currently generating about 0.19 per unit of risk. If you would invest  9,606  in Advanced Micro Devices on April 29, 2025 and sell it today you would earn a total of  7,041  from holding Advanced Micro Devices or generate 73.3% return on investment over 90 days.

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

Advanced Micro Devices  vs.  PDF Solutions

Advanced Micro Devices

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, Advanced Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

PDF Solutions

Risk-Adjusted Performance

Good

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

Pair Trading with Advanced Micro and PDF Solutions

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

The idea behind Advanced Micro Devices and PDF Solutions 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.