Correlation Between Asia Optical and Aiptek International
Can any of the company-specific risk be diversified away by investing in both Asia Optical and Aiptek International 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 Aiptek International 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 Aiptek International, you can compare the effects of market volatilities on Asia Optical and Aiptek International 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 Aiptek International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Optical and Aiptek International.
Diversification Opportunities for Asia Optical and Aiptek International
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asia and Aiptek is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Asia Optical Co and Aiptek International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aiptek International 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 Aiptek International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aiptek International has no effect on the direction of Asia Optical i.e., Asia Optical and Aiptek International go up and down completely randomly.
Pair Corralation between Asia Optical and Aiptek International
Assuming the 90 days trading horizon Asia Optical Co is expected to generate 1.21 times more return on investment than Aiptek International. However, Asia Optical is 1.21 times more volatile than Aiptek International. It trades about 0.12 of its potential returns per unit of risk. Aiptek International is currently generating about -0.01 per unit of risk. If you would invest 6,670 in Asia Optical Co on September 1, 2024 and sell it today you would earn a total of 4,080 from holding Asia Optical Co or generate 61.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Asia Optical Co vs. Aiptek International
Performance |
| Timeline |
| Asia Optical |
| Aiptek International |
Asia Optical and Aiptek International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Optical and Aiptek International
The main advantage of trading using opposite Asia Optical and Aiptek International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Optical position performs unexpectedly, Aiptek International 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 Aiptek International will offset losses from the drop in Aiptek International's long position.The idea behind Asia Optical Co and Aiptek International 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.| Aiptek International vs. Chaintech Technology Corp | Aiptek International vs. AVerMedia Technologies | Aiptek International vs. Avision | Aiptek International vs. Clevo 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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