Correlation Between Tainan Spinning and AVerMedia Technologies
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and AVerMedia Technologies 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 Tainan Spinning and AVerMedia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainan Spinning Co and AVerMedia Technologies, you can compare the effects of market volatilities on Tainan Spinning and AVerMedia Technologies 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 Tainan Spinning with a short position of AVerMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and AVerMedia Technologies.
Diversification Opportunities for Tainan Spinning and AVerMedia Technologies
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tainan and AVerMedia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and AVerMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVerMedia Technologies and Tainan Spinning 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 Tainan Spinning Co are associated (or correlated) with AVerMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVerMedia Technologies has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and AVerMedia Technologies go up and down completely randomly.
Pair Corralation between Tainan Spinning and AVerMedia Technologies
Assuming the 90 days trading horizon Tainan Spinning is expected to generate 161.4 times less return on investment than AVerMedia Technologies. But when comparing it to its historical volatility, Tainan Spinning Co is 1.9 times less risky than AVerMedia Technologies. It trades about 0.0 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,870 in AVerMedia Technologies on September 4, 2024 and sell it today you would earn a total of 210.00 from holding AVerMedia Technologies or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. AVerMedia Technologies
Performance |
| Timeline |
| Tainan Spinning |
| AVerMedia Technologies |
Tainan Spinning and AVerMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and AVerMedia Technologies
The main advantage of trading using opposite Tainan Spinning and AVerMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, AVerMedia Technologies 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 AVerMedia Technologies will offset losses from the drop in AVerMedia Technologies' long position.| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
| AVerMedia Technologies vs. Tainan Spinning Co | AVerMedia Technologies vs. Chia Her Industrial | AVerMedia Technologies vs. WiseChip Semiconductor | AVerMedia Technologies vs. Novatek Microelectronics Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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