Correlation Between Asmedia Technology and Global Unichip
Can any of the company-specific risk be diversified away by investing in both Asmedia Technology and Global Unichip 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 Asmedia Technology and Global Unichip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asmedia Technology and Global Unichip Corp, you can compare the effects of market volatilities on Asmedia Technology and Global Unichip 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 Asmedia Technology with a short position of Global Unichip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asmedia Technology and Global Unichip.
Diversification Opportunities for Asmedia Technology and Global Unichip
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asmedia and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Asmedia Technology and Global Unichip Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Unichip Corp and Asmedia Technology 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 Asmedia Technology are associated (or correlated) with Global Unichip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Unichip Corp has no effect on the direction of Asmedia Technology i.e., Asmedia Technology and Global Unichip go up and down completely randomly.
Pair Corralation between Asmedia Technology and Global Unichip
Assuming the 90 days trading horizon Asmedia Technology is expected to generate 1.0 times more return on investment than Global Unichip. However, Asmedia Technology is 1.0 times more volatile than Global Unichip Corp. It trades about 0.07 of its potential returns per unit of risk. Global Unichip Corp is currently generating about 0.04 per unit of risk. If you would invest 87,385 in Asmedia Technology on November 5, 2024 and sell it today you would earn a total of 119,615 from holding Asmedia Technology or generate 136.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Asmedia Technology vs. Global Unichip Corp
Performance |
| Timeline |
| Asmedia Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Global Unichip Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Asmedia Technology and Global Unichip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asmedia Technology and Global Unichip
The main advantage of trading using opposite Asmedia Technology and Global Unichip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asmedia Technology position performs unexpectedly, Global Unichip 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 Global Unichip will offset losses from the drop in Global Unichip's long position.The idea behind Asmedia Technology and Global Unichip Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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