Correlation Between Elitegroup Computer and Axiomtek
Can any of the company-specific risk be diversified away by investing in both Elitegroup Computer and Axiomtek 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 Elitegroup Computer and Axiomtek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elitegroup Computer Systems and Axiomtek Co, you can compare the effects of market volatilities on Elitegroup Computer and Axiomtek 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 Elitegroup Computer with a short position of Axiomtek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elitegroup Computer and Axiomtek.
Diversification Opportunities for Elitegroup Computer and Axiomtek
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Elitegroup and Axiomtek is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Elitegroup Computer Systems and Axiomtek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axiomtek and Elitegroup Computer 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 Elitegroup Computer Systems are associated (or correlated) with Axiomtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axiomtek has no effect on the direction of Elitegroup Computer i.e., Elitegroup Computer and Axiomtek go up and down completely randomly.
Pair Corralation between Elitegroup Computer and Axiomtek
Assuming the 90 days trading horizon Elitegroup Computer Systems is expected to under-perform the Axiomtek. In addition to that, Elitegroup Computer is 1.02 times more volatile than Axiomtek Co. It trades about -0.04 of its total potential returns per unit of risk. Axiomtek Co is currently generating about 0.1 per unit of volatility. If you would invest 7,881 in Axiomtek Co on November 4, 2024 and sell it today you would earn a total of 4,919 from holding Axiomtek Co or generate 62.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elitegroup Computer Systems vs. Axiomtek Co
Performance |
| Timeline |
| Elitegroup Computer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Axiomtek |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Elitegroup Computer and Axiomtek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elitegroup Computer and Axiomtek
The main advantage of trading using opposite Elitegroup Computer and Axiomtek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elitegroup Computer position performs unexpectedly, Axiomtek 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 Axiomtek will offset losses from the drop in Axiomtek's long position.The idea behind Elitegroup Computer Systems and Axiomtek Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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