Correlation Between Asia Vital and Action Electronics
Can any of the company-specific risk be diversified away by investing in both Asia Vital and Action Electronics 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 Asia Vital and Action Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Vital Components and Action Electronics Co, you can compare the effects of market volatilities on Asia Vital and Action Electronics 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 Asia Vital with a short position of Action Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Vital and Action Electronics.
Diversification Opportunities for Asia Vital and Action Electronics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and Action is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Asia Vital Components and Action Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Action Electronics and Asia Vital 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 Asia Vital Components are associated (or correlated) with Action Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Action Electronics has no effect on the direction of Asia Vital i.e., Asia Vital and Action Electronics go up and down completely randomly.
Pair Corralation between Asia Vital and Action Electronics
Assuming the 90 days trading horizon Asia Vital is expected to generate 9.05 times less return on investment than Action Electronics. In addition to that, Asia Vital is 1.04 times more volatile than Action Electronics Co. It trades about 0.02 of its total potential returns per unit of risk. Action Electronics Co is currently generating about 0.22 per unit of volatility. If you would invest 1,770 in Action Electronics Co on August 30, 2024 and sell it today you would earn a total of 200.00 from holding Action Electronics Co or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Vital Components vs. Action Electronics Co
Performance |
| Timeline |
| Asia Vital Components |
| Action Electronics |
Asia Vital and Action Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Vital and Action Electronics
The main advantage of trading using opposite Asia Vital and Action Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Vital position performs unexpectedly, Action Electronics 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 Action Electronics will offset losses from the drop in Action Electronics' long position.| Asia Vital vs. Unimicron Technology Corp | Asia Vital vs. Asia Optical Co | Asia Vital vs. Kinsus Interconnect Technology | Asia Vital vs. Novatek Microelectronics Corp |
| Action Electronics vs. Amtran Technology Co | Action Electronics vs. Asia Optical Co | Action Electronics vs. Emerging Display Technologies | Action Electronics vs. Bright Led Electronics |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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