Correlation Between Asmedia Technology and K Way
Can any of the company-specific risk be diversified away by investing in both Asmedia Technology and K Way 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 K Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asmedia Technology and K Way Information, you can compare the effects of market volatilities on Asmedia Technology and K Way 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 K Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asmedia Technology and K Way.
Diversification Opportunities for Asmedia Technology and K Way
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Asmedia and 5201 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Asmedia Technology and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information 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 K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of Asmedia Technology i.e., Asmedia Technology and K Way go up and down completely randomly.
Pair Corralation between Asmedia Technology and K Way
Assuming the 90 days trading horizon Asmedia Technology is expected to under-perform the K Way. But the stock apears to be less risky and, when comparing its historical volatility, Asmedia Technology is 1.19 times less risky than K Way. The stock trades about 0.0 of its potential returns per unit of risk. The K Way Information is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 2,845 in K Way Information on November 7, 2024 and sell it today you would earn a total of 375.00 from holding K Way Information or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asmedia Technology vs. K Way Information
Performance |
| Timeline |
| Asmedia Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| K Way Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Asmedia Technology and K Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asmedia Technology and K Way
The main advantage of trading using opposite Asmedia Technology and K Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asmedia Technology position performs unexpectedly, K Way 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 K Way will offset losses from the drop in K Way's long position.The idea behind Asmedia Technology and K Way Information 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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