Correlation Between AVerMedia Technologies and Tong Tai
Can any of the company-specific risk be diversified away by investing in both AVerMedia Technologies and Tong Tai 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 Tong Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVerMedia Technologies and Tong Tai Machine Tool, you can compare the effects of market volatilities on AVerMedia Technologies and Tong Tai 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 Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Tong Tai.
Diversification Opportunities for AVerMedia Technologies and Tong Tai
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AVerMedia and Tong is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine 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 Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Tong Tai go up and down completely randomly.
Pair Corralation between AVerMedia Technologies and Tong Tai
Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 0.46 times more return on investment than Tong Tai. However, AVerMedia Technologies is 2.16 times less risky than Tong Tai. It trades about 0.05 of its potential returns per unit of risk. Tong Tai Machine Tool is currently generating about 0.03 per unit of risk. If you would invest 3,990 in AVerMedia Technologies on September 4, 2024 and sell it today you would earn a total of 70.00 from holding AVerMedia Technologies or generate 1.75% 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. Tong Tai Machine Tool
Performance |
| Timeline |
| AVerMedia Technologies |
| Tong Tai Machine |
AVerMedia Technologies and Tong Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVerMedia Technologies and Tong Tai
The main advantage of trading using opposite AVerMedia Technologies and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVerMedia Technologies position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai's long position.| AVerMedia Technologies vs. Tainan Spinning Co | AVerMedia Technologies vs. Chia Her Industrial | AVerMedia Technologies vs. WiseChip Semiconductor | AVerMedia Technologies vs. Novatek Microelectronics Corp |
| Tong Tai vs. Universal Microelectronics Co | Tong Tai vs. AVerMedia Technologies | Tong Tai vs. Symtek Automation Asia | Tong Tai vs. WiseChip Semiconductor |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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