Correlation Between ITE Tech and ALi Corp
Can any of the company-specific risk be diversified away by investing in both ITE Tech and ALi Corp 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 ITE Tech and ALi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITE Tech and ALi Corp, you can compare the effects of market volatilities on ITE Tech and ALi Corp 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 ITE Tech with a short position of ALi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITE Tech and ALi Corp.
Diversification Opportunities for ITE Tech and ALi Corp
Weak diversification
The 3 months correlation between ITE and ALi is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ITE Tech and ALi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALi Corp and ITE Tech 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 ITE Tech are associated (or correlated) with ALi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALi Corp has no effect on the direction of ITE Tech i.e., ITE Tech and ALi Corp go up and down completely randomly.
Pair Corralation between ITE Tech and ALi Corp
Assuming the 90 days trading horizon ITE Tech is expected to under-perform the ALi Corp. But the stock apears to be less risky and, when comparing its historical volatility, ITE Tech is 4.75 times less risky than ALi Corp. The stock trades about 0.0 of its potential returns per unit of risk. The ALi Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,310 in ALi Corp on August 30, 2024 and sell it today you would earn a total of 510.00 from holding ALi Corp or generate 22.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITE Tech vs. ALi Corp
Performance |
| Timeline |
| ITE Tech |
| ALi Corp |
ITE Tech and ALi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITE Tech and ALi Corp
The main advantage of trading using opposite ITE Tech and ALi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITE Tech position performs unexpectedly, ALi Corp 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 ALi Corp will offset losses from the drop in ALi Corp's long position.| ITE Tech vs. Novatek Microelectronics Corp | ITE Tech vs. Elan Microelectronics Corp | ITE Tech vs. Elite Semiconductor Memory | ITE Tech vs. Faraday Technology Corp |
| ALi Corp vs. Sunplus Technology Co | ALi Corp vs. Silicon Integrated Systems | ALi Corp vs. Zinwell | ALi Corp vs. Altek 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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