Correlation Between China and AVerMedia Technologies
Can any of the company-specific risk be diversified away by investing in both China 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 China and AVerMedia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Motor Corp and AVerMedia Technologies, you can compare the effects of market volatilities on China 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 China with a short position of AVerMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of China and AVerMedia Technologies.
Diversification Opportunities for China and AVerMedia Technologies
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and AVerMedia is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Motor Corp and AVerMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVerMedia Technologies and China 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 China Motor Corp 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 China i.e., China and AVerMedia Technologies go up and down completely randomly.
Pair Corralation between China and AVerMedia Technologies
Assuming the 90 days trading horizon China Motor Corp is expected to generate 0.48 times more return on investment than AVerMedia Technologies. However, China Motor Corp is 2.07 times less risky than AVerMedia Technologies. It trades about 0.09 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about -0.04 per unit of risk. If you would invest 7,910 in China Motor Corp on October 31, 2024 and sell it today you would earn a total of 190.00 from holding China Motor Corp or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Motor Corp vs. AVerMedia Technologies
Performance |
| Timeline |
| China Motor Corp |
| AVerMedia Technologies |
China and AVerMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China and AVerMedia Technologies
The main advantage of trading using opposite China and AVerMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China 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.| China vs. Yulon Motor Co | China vs. Nan Ya Plastics | China vs. Cheng Shin Rubber | China vs. Far Eastern New |
| AVerMedia Technologies vs. Tong Yang Industry | AVerMedia Technologies vs. Ta Yih Industrial | AVerMedia Technologies vs. Basso Industry Corp | AVerMedia Technologies vs. China Motor 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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