Correlation Between Avadel Pharmaceuticals and Advanced Micro

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

By analyzing existing cross correlation between Avadel Pharmaceuticals PLC and Advanced Micro Devices, you can compare the effects of market volatilities on Avadel Pharmaceuticals and Advanced Micro 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 Avadel Pharmaceuticals with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avadel Pharmaceuticals and Advanced Micro.

Diversification Opportunities for Avadel Pharmaceuticals and Advanced Micro

0.45

Correlation Coefficient

Avadel Pharmaceuticals  Advanced Micro

Very weak diversification

The 3 months correlation between Avadel and Advanced is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Avadel Pharmaceuticals PLC and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Avadel Pharmaceuticals 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 Avadel Pharmaceuticals PLC are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Avadel Pharmaceuticals i.e., Avadel Pharmaceuticals and Advanced Micro go up and down completely randomly.

Pair Corralation between Avadel Pharmaceuticals and Advanced Micro

Given the investment horizon of 90 days Avadel Pharmaceuticals PLC is expected to generate 0.74 times more return on investment than Advanced Micro. However, Avadel Pharmaceuticals PLC is 1.35 times less risky than Advanced Micro. It trades about 0.06 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.03 per unit of risk. If you would invest  797.00  in Avadel Pharmaceuticals PLC on February 3, 2025 and sell it today you would earn a total of  73.00  from holding Avadel Pharmaceuticals PLC or generate 9.16% return on investment over 90 days.

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

Avadel Pharmaceuticals PLC  vs.  Advanced Micro Devices

Avadel Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avadel Pharmaceuticals PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Avadel Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Advanced Micro Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Avadel Pharmaceuticals and Advanced Micro

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

The idea behind Avadel Pharmaceuticals PLC and Advanced Micro 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 Stocks Directory module to find actively traded stocks across global markets.