Correlation Between ChipsMedia and AFW
Can any of the company-specific risk be diversified away by investing in both ChipsMedia and AFW 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 ChipsMedia and AFW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChipsMedia and AFW Co, you can compare the effects of market volatilities on ChipsMedia and AFW 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 ChipsMedia with a short position of AFW. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChipsMedia and AFW.
Diversification Opportunities for ChipsMedia and AFW
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ChipsMedia and AFW is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ChipsMedia and AFW Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFW Co and ChipsMedia 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 ChipsMedia are associated (or correlated) with AFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFW Co has no effect on the direction of ChipsMedia i.e., ChipsMedia and AFW go up and down completely randomly.
Pair Corralation between ChipsMedia and AFW
Assuming the 90 days trading horizon ChipsMedia is expected to generate 0.94 times more return on investment than AFW. However, ChipsMedia is 1.06 times less risky than AFW. It trades about 0.01 of its potential returns per unit of risk. AFW Co is currently generating about -0.15 per unit of risk. If you would invest 1,307,000 in ChipsMedia on September 13, 2024 and sell it today you would lose (17,000) from holding ChipsMedia or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ChipsMedia vs. AFW Co
Performance |
| Timeline |
| ChipsMedia |
| AFW Co |
ChipsMedia and AFW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChipsMedia and AFW
The main advantage of trading using opposite ChipsMedia and AFW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChipsMedia position performs unexpectedly, AFW 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 AFW will offset losses from the drop in AFW's long position.| ChipsMedia vs. Lake Materials Co | ChipsMedia vs. Union Materials Corp | ChipsMedia vs. Ecoplastic | ChipsMedia vs. EV Advanced Material |
| AFW vs. Barunson Entertainment Arts | AFW vs. ChipsMedia | AFW vs. Duksan Hi Metal | AFW vs. Daiyang Metal Co |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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