Correlation Between Asia Vital and Andes Technology
Can any of the company-specific risk be diversified away by investing in both Asia Vital and Andes 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 Asia Vital and Andes Technology 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 Andes Technology Corp, you can compare the effects of market volatilities on Asia Vital and Andes 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 Asia Vital with a short position of Andes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Vital and Andes Technology.
Diversification Opportunities for Asia Vital and Andes Technology
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Asia and Andes is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Asia Vital Components and Andes Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andes Technology Corp 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 Andes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andes Technology Corp has no effect on the direction of Asia Vital i.e., Asia Vital and Andes Technology go up and down completely randomly.
Pair Corralation between Asia Vital and Andes Technology
Assuming the 90 days trading horizon Asia Vital Components is expected to generate 1.04 times more return on investment than Andes Technology. However, Asia Vital is 1.04 times more volatile than Andes Technology Corp. It trades about 0.03 of its potential returns per unit of risk. Andes Technology Corp is currently generating about -0.15 per unit of risk. If you would invest 63,800 in Asia Vital Components on September 1, 2024 and sell it today you would earn a total of 500.00 from holding Asia Vital Components or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Asia Vital Components vs. Andes Technology Corp
Performance |
| Timeline |
| Asia Vital Components |
| Andes Technology Corp |
Asia Vital and Andes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Vital and Andes Technology
The main advantage of trading using opposite Asia Vital and Andes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Vital position performs unexpectedly, Andes 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 Andes Technology will offset losses from the drop in Andes Technology's long position.The idea behind Asia Vital Components and Andes Technology Corp 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.| Andes Technology vs. Cameo Communications | Andes Technology vs. Arima Communications Corp | Andes Technology vs. Cheng Mei Materials | Andes Technology vs. Nankang Rubber Tire |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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