Correlation Between ITE Tech and Edimax Technology
Can any of the company-specific risk be diversified away by investing in both ITE Tech and Edimax Technology 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 Edimax Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITE Tech and Edimax Technology Co, you can compare the effects of market volatilities on ITE Tech and Edimax Technology 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 Edimax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITE Tech and Edimax Technology.
Diversification Opportunities for ITE Tech and Edimax Technology
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between ITE and Edimax is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ITE Tech and Edimax Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edimax Technology 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 Edimax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edimax Technology has no effect on the direction of ITE Tech i.e., ITE Tech and Edimax Technology go up and down completely randomly.
Pair Corralation between ITE Tech and Edimax Technology
Assuming the 90 days trading horizon ITE Tech is expected to generate 1.23 times more return on investment than Edimax Technology. However, ITE Tech is 1.23 times more volatile than Edimax Technology Co. It trades about 0.04 of its potential returns per unit of risk. Edimax Technology Co is currently generating about -0.19 per unit of risk. If you would invest 13,850 in ITE Tech on September 2, 2024 and sell it today you would earn a total of 200.00 from holding ITE Tech or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITE Tech vs. Edimax Technology Co
Performance |
| Timeline |
| ITE Tech |
| Edimax Technology |
ITE Tech and Edimax Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITE Tech and Edimax Technology
The main advantage of trading using opposite ITE Tech and Edimax Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITE Tech position performs unexpectedly, Edimax Technology 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 Edimax Technology will offset losses from the drop in Edimax Technology'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 |
| Edimax Technology vs. CyberTAN Technology | Edimax Technology vs. HannsTouch Solution | Edimax Technology vs. Alpha Networks | Edimax Technology vs. Billion Electric Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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