Correlation Between AVerMedia Technologies and Avision
Can any of the company-specific risk be diversified away by investing in both AVerMedia Technologies and Avision 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 Avision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVerMedia Technologies and Avision, you can compare the effects of market volatilities on AVerMedia Technologies and Avision 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 Avision. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Avision.
Diversification Opportunities for AVerMedia Technologies and Avision
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AVerMedia and Avision is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Avision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avision 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 Avision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avision has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Avision go up and down completely randomly.
Pair Corralation between AVerMedia Technologies and Avision
Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 0.48 times more return on investment than Avision. However, AVerMedia Technologies is 2.07 times less risky than Avision. It trades about -0.02 of its potential returns per unit of risk. Avision is currently generating about -0.42 per unit of risk. If you would invest 4,070 in AVerMedia Technologies on August 28, 2024 and sell it today you would lose (40.00) from holding AVerMedia Technologies or give up 0.98% 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. Avision
Performance |
| Timeline |
| AVerMedia Technologies |
| Avision |
AVerMedia Technologies and Avision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVerMedia Technologies and Avision
The main advantage of trading using opposite AVerMedia Technologies and Avision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVerMedia Technologies position performs unexpectedly, Avision 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 Avision will offset losses from the drop in Avision's long position.| AVerMedia Technologies vs. Taiwan Semiconductor Manufacturing | AVerMedia Technologies vs. Hon Hai Precision | AVerMedia Technologies vs. MediaTek | AVerMedia Technologies vs. Chunghwa Telecom 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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