Correlation Between AVerMedia Technologies and Leatec Fine
Can any of the company-specific risk be diversified away by investing in both AVerMedia Technologies and Leatec Fine 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 Leatec Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVerMedia Technologies and Leatec Fine Ceramics, you can compare the effects of market volatilities on AVerMedia Technologies and Leatec Fine 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 Leatec Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Leatec Fine.
Diversification Opportunities for AVerMedia Technologies and Leatec Fine
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AVerMedia and Leatec is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics 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 Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Leatec Fine go up and down completely randomly.
Pair Corralation between AVerMedia Technologies and Leatec Fine
Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 0.93 times more return on investment than Leatec Fine. However, AVerMedia Technologies is 1.08 times less risky than Leatec Fine. It trades about 0.13 of its potential returns per unit of risk. Leatec Fine Ceramics is currently generating about -0.04 per unit of risk. If you would invest 4,015 in AVerMedia Technologies on November 6, 2024 and sell it today you would earn a total of 840.00 from holding AVerMedia Technologies or generate 20.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVerMedia Technologies vs. Leatec Fine Ceramics
Performance |
| Timeline |
| AVerMedia Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Leatec Fine Ceramics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AVerMedia Technologies and Leatec Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVerMedia Technologies and Leatec Fine
The main advantage of trading using opposite AVerMedia Technologies and Leatec Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVerMedia Technologies position performs unexpectedly, Leatec Fine 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 Leatec Fine will offset losses from the drop in Leatec Fine's long position.The idea behind AVerMedia Technologies and Leatec Fine Ceramics 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.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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