Correlation Between Asia Optical and Global Unichip
Can any of the company-specific risk be diversified away by investing in both Asia Optical and Global Unichip 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 Global Unichip 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 Global Unichip Corp, you can compare the effects of market volatilities on Asia Optical and Global Unichip 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 Global Unichip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Optical and Global Unichip.
Diversification Opportunities for Asia Optical and Global Unichip
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asia and Global is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Asia Optical Co and Global Unichip Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Unichip Corp 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 Global Unichip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Unichip Corp has no effect on the direction of Asia Optical i.e., Asia Optical and Global Unichip go up and down completely randomly.
Pair Corralation between Asia Optical and Global Unichip
Assuming the 90 days trading horizon Asia Optical Co is expected to generate 0.69 times more return on investment than Global Unichip. However, Asia Optical Co is 1.44 times less risky than Global Unichip. It trades about 0.07 of its potential returns per unit of risk. Global Unichip Corp is currently generating about 0.0 per unit of risk. If you would invest 6,510 in Asia Optical Co on August 31, 2024 and sell it today you would earn a total of 3,940 from holding Asia Optical Co or generate 60.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Asia Optical Co vs. Global Unichip Corp
Performance |
| Timeline |
| Asia Optical |
| Global Unichip Corp |
Asia Optical and Global Unichip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Optical and Global Unichip
The main advantage of trading using opposite Asia Optical and Global Unichip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Optical position performs unexpectedly, Global Unichip 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 Global Unichip will offset losses from the drop in Global Unichip'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 |
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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