Correlation Between Avision and Far Eastern
Can any of the company-specific risk be diversified away by investing in both Avision and Far Eastern 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 Avision and Far Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avision and Far Eastern Department, you can compare the effects of market volatilities on Avision and Far Eastern 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 Avision with a short position of Far Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avision and Far Eastern.
Diversification Opportunities for Avision and Far Eastern
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avision and Far is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Avision and Far Eastern Department in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far Eastern Department and Avision 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 Avision are associated (or correlated) with Far Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far Eastern Department has no effect on the direction of Avision i.e., Avision and Far Eastern go up and down completely randomly.
Pair Corralation between Avision and Far Eastern
Assuming the 90 days trading horizon Avision is expected to under-perform the Far Eastern. In addition to that, Avision is 5.21 times more volatile than Far Eastern Department. It trades about -0.23 of its total potential returns per unit of risk. Far Eastern Department is currently generating about -0.17 per unit of volatility. If you would invest 2,565 in Far Eastern Department on August 31, 2024 and sell it today you would lose (75.00) from holding Far Eastern Department or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avision vs. Far Eastern Department
Performance |
| Timeline |
| Avision |
| Far Eastern Department |
Avision and Far Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avision and Far Eastern
The main advantage of trading using opposite Avision and Far Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avision position performs unexpectedly, Far Eastern 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 Far Eastern will offset losses from the drop in Far Eastern's long position.| Avision vs. United Microelectronics | Avision vs. Winbond Electronics Corp | Avision vs. Macronix International Co |
| Far Eastern vs. Chaintech Technology Corp | Far Eastern vs. AVerMedia Technologies | Far Eastern vs. Avision | Far Eastern vs. Clevo 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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