Correlation Between Asia Optical and Asia Vital
Can any of the company-specific risk be diversified away by investing in both Asia Optical and Asia Vital 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 Optical and Asia Vital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Optical Co and Asia Vital Components, you can compare the effects of market volatilities on Asia Optical and Asia Vital 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 Optical with a short position of Asia Vital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Optical and Asia Vital.
Diversification Opportunities for Asia Optical and Asia Vital
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asia and Asia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Asia Optical Co and Asia Vital Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Vital Components and Asia Optical 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 Optical Co are associated (or correlated) with Asia Vital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Vital Components has no effect on the direction of Asia Optical i.e., Asia Optical and Asia Vital go up and down completely randomly.
Pair Corralation between Asia Optical and Asia Vital
Assuming the 90 days trading horizon Asia Optical Co is expected to under-perform the Asia Vital. In addition to that, Asia Optical is 1.11 times more volatile than Asia Vital Components. It trades about -0.15 of its total potential returns per unit of risk. Asia Vital Components is currently generating about -0.1 per unit of volatility. If you would invest 62,700 in Asia Vital Components on October 29, 2024 and sell it today you would lose (4,800) from holding Asia Vital Components or give up 7.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Optical Co vs. Asia Vital Components
Performance |
| Timeline |
| Asia Optical |
| Asia Vital Components |
Asia Optical and Asia Vital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Optical and Asia Vital
The main advantage of trading using opposite Asia Optical and Asia Vital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Optical position performs unexpectedly, Asia Vital 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 Asia Vital will offset losses from the drop in Asia Vital's long position.| Asia Optical vs. LARGAN Precision Co | Asia Optical vs. Novatek Microelectronics Corp | Asia Optical vs. Genius Electronic Optical | Asia Optical vs. Catcher Technology Co |
| Asia Vital vs. Unimicron Technology Corp | Asia Vital vs. Kinsus Interconnect Technology | Asia Vital vs. Novatek Microelectronics Corp | Asia Vital vs. Delta 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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