Correlation Between Altek Corp and Edimax Technology
Can any of the company-specific risk be diversified away by investing in both Altek Corp and Edimax 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 Altek Corp and Edimax Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altek Corp and Edimax Technology Co, you can compare the effects of market volatilities on Altek Corp and Edimax 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 Altek Corp with a short position of Edimax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altek Corp and Edimax Technology.
Diversification Opportunities for Altek Corp and Edimax Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Altek and Edimax is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Altek Corp and Edimax Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edimax Technology and Altek Corp 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 Altek Corp are associated (or correlated) with Edimax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edimax Technology has no effect on the direction of Altek Corp i.e., Altek Corp and Edimax Technology go up and down completely randomly.
Pair Corralation between Altek Corp and Edimax Technology
Assuming the 90 days trading horizon Altek Corp is expected to generate 0.59 times more return on investment than Edimax Technology. However, Altek Corp is 1.7 times less risky than Edimax Technology. It trades about -0.18 of its potential returns per unit of risk. Edimax Technology Co is currently generating about -0.19 per unit of risk. If you would invest 3,385 in Altek Corp on September 2, 2024 and sell it today you would lose (185.00) from holding Altek Corp or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altek Corp vs. Edimax Technology Co
Performance |
| Timeline |
| Altek Corp |
| Edimax Technology |
Altek Corp and Edimax Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altek Corp and Edimax Technology
The main advantage of trading using opposite Altek Corp and Edimax Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altek Corp position performs unexpectedly, Edimax 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 Edimax Technology will offset losses from the drop in Edimax Technology's long position.| Altek Corp vs. Chaintech Technology Corp | Altek Corp vs. Avision | Altek Corp vs. Clevo Co | Altek Corp vs. Elitegroup Computer Systems |
| Edimax Technology vs. CyberTAN Technology | Edimax Technology vs. HannsTouch Solution | Edimax Technology vs. Alpha Networks | Edimax Technology vs. Billion Electric 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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