Correlation Between Elite Semiconductor and AVer Information
Can any of the company-specific risk be diversified away by investing in both Elite Semiconductor and AVer Information 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 Elite Semiconductor and AVer Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Semiconductor Memory and AVer Information, you can compare the effects of market volatilities on Elite Semiconductor and AVer Information 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 Elite Semiconductor with a short position of AVer Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Semiconductor and AVer Information.
Diversification Opportunities for Elite Semiconductor and AVer Information
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elite and AVer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Elite Semiconductor Memory and AVer Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVer Information and Elite Semiconductor 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 Elite Semiconductor Memory are associated (or correlated) with AVer Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVer Information has no effect on the direction of Elite Semiconductor i.e., Elite Semiconductor and AVer Information go up and down completely randomly.
Pair Corralation between Elite Semiconductor and AVer Information
Assuming the 90 days trading horizon Elite Semiconductor Memory is expected to generate 1.77 times more return on investment than AVer Information. However, Elite Semiconductor is 1.77 times more volatile than AVer Information. It trades about -0.06 of its potential returns per unit of risk. AVer Information is currently generating about -0.25 per unit of risk. If you would invest 6,220 in Elite Semiconductor Memory on November 5, 2024 and sell it today you would lose (160.00) from holding Elite Semiconductor Memory or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Semiconductor Memory vs. AVer Information
Performance |
| Timeline |
| Elite Semiconductor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AVer Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Elite Semiconductor and AVer Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Semiconductor and AVer Information
The main advantage of trading using opposite Elite Semiconductor and AVer Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Semiconductor position performs unexpectedly, AVer Information 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 AVer Information will offset losses from the drop in AVer Information's long position.The idea behind Elite Semiconductor Memory and AVer Information 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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