Correlation Between AVerMedia Technologies and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both AVerMedia Technologies and Tehmag Foods 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 AVerMedia Technologies and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVerMedia Technologies and Tehmag Foods, you can compare the effects of market volatilities on AVerMedia Technologies and Tehmag Foods 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 AVerMedia Technologies with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Tehmag Foods.
Diversification Opportunities for AVerMedia Technologies and Tehmag Foods
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AVerMedia and Tehmag is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and AVerMedia Technologies 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 AVerMedia Technologies are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Tehmag Foods go up and down completely randomly.
Pair Corralation between AVerMedia Technologies and Tehmag Foods
Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 4.88 times more return on investment than Tehmag Foods. However, AVerMedia Technologies is 4.88 times more volatile than Tehmag Foods. It trades about 0.06 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.1 per unit of risk. If you would invest 2,440 in AVerMedia Technologies on November 27, 2024 and sell it today you would earn a total of 2,770 from holding AVerMedia Technologies or generate 113.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVerMedia Technologies vs. Tehmag Foods
Performance |
| Timeline |
| AVerMedia Technologies |
| Tehmag Foods |
AVerMedia Technologies and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVerMedia Technologies and Tehmag Foods
The main advantage of trading using opposite AVerMedia Technologies and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVerMedia Technologies position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| AVerMedia Technologies vs. Tainan Enterprises Co | AVerMedia Technologies vs. De Licacy Industrial | AVerMedia Technologies vs. Nien Hsing Textile | AVerMedia Technologies vs. Wisher Industrial Co |
| Tehmag Foods vs. Asia Metal Industries | Tehmag Foods vs. Chernan Metal Industrial | Tehmag Foods vs. ANJI Technology Co | Tehmag Foods vs. Kinsus Interconnect Technology |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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