Correlation Between AVerMedia Technologies and Test Rite
Can any of the company-specific risk be diversified away by investing in both AVerMedia Technologies and Test Rite 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 Test Rite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVerMedia Technologies and Test Rite International, you can compare the effects of market volatilities on AVerMedia Technologies and Test Rite 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 Test Rite. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Test Rite.
Diversification Opportunities for AVerMedia Technologies and Test Rite
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AVerMedia and Test is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Test Rite International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Test Rite International 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 Test Rite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Test Rite International has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Test Rite go up and down completely randomly.
Pair Corralation between AVerMedia Technologies and Test Rite
Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 3.82 times more return on investment than Test Rite. However, AVerMedia Technologies is 3.82 times more volatile than Test Rite International. It trades about 0.03 of its potential returns per unit of risk. Test Rite International is currently generating about -0.02 per unit of risk. If you would invest 4,080 in AVerMedia Technologies on September 2, 2024 and sell it today you would earn a total of 30.00 from holding AVerMedia Technologies or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVerMedia Technologies vs. Test Rite International
Performance |
| Timeline |
| AVerMedia Technologies |
| Test Rite International |
AVerMedia Technologies and Test Rite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVerMedia Technologies and Test Rite
The main advantage of trading using opposite AVerMedia Technologies and Test Rite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVerMedia Technologies position performs unexpectedly, Test Rite 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 Test Rite will offset losses from the drop in Test Rite's long position.| AVerMedia Technologies vs. Chaintech Technology Corp | AVerMedia Technologies vs. Avision | AVerMedia Technologies vs. Clevo Co | AVerMedia Technologies vs. Elitegroup Computer Systems |
| Test Rite vs. President Chain Store | Test Rite vs. Far Eastern Department | Test Rite vs. Mercuries Associates Holding | Test Rite vs. China Motor Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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