Correlation Between Alchip Technologies and New Advanced
Can any of the company-specific risk be diversified away by investing in both Alchip Technologies and New Advanced 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 Alchip Technologies and New Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alchip Technologies and New Advanced Electronics, you can compare the effects of market volatilities on Alchip Technologies and New Advanced 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 Alchip Technologies with a short position of New Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alchip Technologies and New Advanced.
Diversification Opportunities for Alchip Technologies and New Advanced
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alchip and New is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Alchip Technologies and New Advanced Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Advanced Electronics and Alchip Technologies 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 Alchip Technologies are associated (or correlated) with New Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Advanced Electronics has no effect on the direction of Alchip Technologies i.e., Alchip Technologies and New Advanced go up and down completely randomly.
Pair Corralation between Alchip Technologies and New Advanced
Assuming the 90 days trading horizon Alchip Technologies is expected to generate 1.68 times more return on investment than New Advanced. However, Alchip Technologies is 1.68 times more volatile than New Advanced Electronics. It trades about 0.21 of its potential returns per unit of risk. New Advanced Electronics is currently generating about -0.09 per unit of risk. If you would invest 231,500 in Alchip Technologies on September 13, 2024 and sell it today you would earn a total of 36,000 from holding Alchip Technologies or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alchip Technologies vs. New Advanced Electronics
Performance |
| Timeline |
| Alchip Technologies |
| New Advanced Electronics |
Alchip Technologies and New Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alchip Technologies and New Advanced
The main advantage of trading using opposite Alchip Technologies and New Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alchip Technologies position performs unexpectedly, New Advanced 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 New Advanced will offset losses from the drop in New Advanced's long position.| Alchip Technologies vs. WIN Semiconductors | Alchip Technologies vs. GlobalWafers Co | Alchip Technologies vs. Novatek Microelectronics Corp | Alchip Technologies vs. Ruentex Development Co |
| New Advanced vs. Holiday Entertainment Co | New Advanced vs. Posiflex Technology | New Advanced vs. United Radiant Technology | New Advanced vs. Chicony Power Technology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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