Correlation Between Data Communications and Advanced Micro

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

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

Diversification Opportunities for Data Communications and Advanced Micro

-0.82

Correlation Coefficient

Data Communications  Advanced Micro

Pay attention - limited upside

The 3 months correlation between Data and Advanced is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Data Communications Management 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 Data Communications 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 Data Communications Management 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 Data Communications i.e., Data Communications and Advanced Micro go up and down completely randomly.

Pair Corralation between Data Communications and Advanced Micro

Assuming the 90 days trading horizon Data Communications Management is expected to under-perform the Advanced Micro. In addition to that, Data Communications is 1.15 times more volatile than Advanced Micro Devices. It trades about -0.09 of its total potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.27 per unit of volatility. If you would invest  2,128  in Advanced Micro Devices on May 19, 2025 and sell it today you would earn a total of  1,172  from holding Advanced Micro Devices or generate 55.08% return on investment over 90 days.

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

Data Communications Management  vs.  Advanced Micro Devices

Data Communications

Risk-Adjusted Performance

Weakest

Over the last 90 days Data Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Advanced Micro Devices

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Advanced Micro displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data Communications and Advanced Micro

The main advantage of trading using opposite Data Communications and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Communications 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 Data Communications Management 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..