Correlation Between AVer Information and Softstar Entertainment

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Can any of the company-specific risk be diversified away by investing in both AVer Information and Softstar Entertainment 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 AVer Information and Softstar Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVer Information and Softstar Entertainment, you can compare the effects of market volatilities on AVer Information and Softstar Entertainment 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 AVer Information with a short position of Softstar Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVer Information and Softstar Entertainment.

Diversification Opportunities for AVer Information and Softstar Entertainment

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AVer and Softstar is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding AVer Information and Softstar Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softstar Entertainment and AVer Information 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 AVer Information are associated (or correlated) with Softstar Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softstar Entertainment has no effect on the direction of AVer Information i.e., AVer Information and Softstar Entertainment go up and down completely randomly.

Pair Corralation between AVer Information and Softstar Entertainment

Assuming the 90 days trading horizon AVer Information is expected to under-perform the Softstar Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, AVer Information is 1.27 times less risky than Softstar Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The Softstar Entertainment is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,910  in Softstar Entertainment on October 30, 2024 and sell it today you would lose (110.00) from holding Softstar Entertainment or give up 1.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AVer Information  vs.  Softstar Entertainment

 Performance 
       Timeline  
AVer Information 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AVer Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
Softstar Entertainment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Softstar Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

AVer Information and Softstar Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AVer Information and Softstar Entertainment

The main advantage of trading using opposite AVer Information and Softstar Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVer Information position performs unexpectedly, Softstar Entertainment 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 Softstar Entertainment will offset losses from the drop in Softstar Entertainment's long position.
The idea behind AVer Information and Softstar Entertainment 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.
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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