Correlation Between Innolux Corp and Asmedia Technology
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Asmedia 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 Innolux Corp and Asmedia Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Asmedia Technology, you can compare the effects of market volatilities on Innolux Corp and Asmedia 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 Innolux Corp with a short position of Asmedia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Asmedia Technology.
Diversification Opportunities for Innolux Corp and Asmedia Technology
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Innolux and Asmedia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Asmedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asmedia Technology and Innolux 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 Innolux Corp are associated (or correlated) with Asmedia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asmedia Technology has no effect on the direction of Innolux Corp i.e., Innolux Corp and Asmedia Technology go up and down completely randomly.
Pair Corralation between Innolux Corp and Asmedia Technology
Assuming the 90 days trading horizon Innolux Corp is expected to under-perform the Asmedia Technology. But the stock apears to be less risky and, when comparing its historical volatility, Innolux Corp is 2.1 times less risky than Asmedia Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Asmedia Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 179,500 in Asmedia Technology on September 12, 2024 and sell it today you would earn a total of 5,500 from holding Asmedia Technology or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Innolux Corp vs. Asmedia Technology
Performance |
| Timeline |
| Innolux Corp |
| Asmedia Technology |
Innolux Corp and Asmedia Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Asmedia Technology
The main advantage of trading using opposite Innolux Corp and Asmedia Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Asmedia 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 Asmedia Technology will offset losses from the drop in Asmedia Technology's long position.| Innolux Corp vs. AU Optronics | Innolux Corp vs. Ruentex Development Co | Innolux Corp vs. WiseChip Semiconductor | Innolux Corp vs. Novatek Microelectronics Corp |
| Asmedia Technology vs. AU Optronics | Asmedia Technology vs. Innolux Corp | Asmedia Technology vs. Ruentex Development Co | Asmedia Technology vs. WiseChip Semiconductor |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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