Correlation Between AVerMedia Technologies and Goodway Machine
Can any of the company-specific risk be diversified away by investing in both AVerMedia Technologies and Goodway Machine 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 Goodway Machine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVerMedia Technologies and Goodway Machine Corp, you can compare the effects of market volatilities on AVerMedia Technologies and Goodway Machine 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 Goodway Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Goodway Machine.
Diversification Opportunities for AVerMedia Technologies and Goodway Machine
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AVerMedia and Goodway is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Goodway Machine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodway Machine Corp 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 Goodway Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodway Machine Corp has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Goodway Machine go up and down completely randomly.
Pair Corralation between AVerMedia Technologies and Goodway Machine
Assuming the 90 days trading horizon AVerMedia Technologies is expected to under-perform the Goodway Machine. In addition to that, AVerMedia Technologies is 1.91 times more volatile than Goodway Machine Corp. It trades about -0.05 of its total potential returns per unit of risk. Goodway Machine Corp is currently generating about -0.02 per unit of volatility. If you would invest 6,020 in Goodway Machine Corp on September 12, 2024 and sell it today you would lose (70.00) from holding Goodway Machine Corp or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVerMedia Technologies vs. Goodway Machine Corp
Performance |
| Timeline |
| AVerMedia Technologies |
| Goodway Machine Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AVerMedia Technologies and Goodway Machine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVerMedia Technologies and Goodway Machine
The main advantage of trading using opposite AVerMedia Technologies and Goodway Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVerMedia Technologies position performs unexpectedly, Goodway Machine 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 Goodway Machine will offset losses from the drop in Goodway Machine's long position.The idea behind AVerMedia Technologies and Goodway Machine Corp 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.
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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