Correlation Between Power Integrations and Advanced Micro

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

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

Diversification Opportunities for Power Integrations and Advanced Micro

0.52

Correlation Coefficient

Power Integrations  Advanced Micro

Very weak diversification

The 3 months correlation between Power and Advanced is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations 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 Power Integrations 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 Power Integrations 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 Power Integrations i.e., Power Integrations and Advanced Micro go up and down completely randomly.

Pair Corralation between Power Integrations and Advanced Micro

Given the investment horizon of 90 days Power Integrations is expected to generate 11.31 times less return on investment than Advanced Micro. In addition to that, Power Integrations is 1.05 times more volatile than Advanced Micro Devices. It trades about 0.03 of its total potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.4 per unit of volatility. If you would invest  9,665  in Advanced Micro Devices on May 1, 2025 and sell it today you would earn a total of  8,079  from holding Advanced Micro Devices or generate 83.59% return on investment over 90 days.

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

Power Integrations  vs.  Advanced Micro Devices

Power Integrations

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Integrations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Power Integrations is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Advanced Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Power Integrations and Advanced Micro

The main advantage of trading using opposite Power Integrations and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations 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 Power Integrations 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.