Correlation Between Asmedia Technology and Simplo Technology

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

Diversification Opportunities for Asmedia Technology and Simplo Technology

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Asmedia and Simplo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Asmedia Technology and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo Technology 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 Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of Asmedia Technology i.e., Asmedia Technology and Simplo Technology go up and down completely randomly.

Pair Corralation between Asmedia Technology and Simplo Technology

Assuming the 90 days trading horizon Asmedia Technology is expected to generate 0.77 times more return on investment than Simplo Technology. However, Asmedia Technology is 1.3 times less risky than Simplo Technology. It trades about -0.07 of its potential returns per unit of risk. Simplo Technology Co is currently generating about -0.15 per unit of risk. If you would invest  206,500  in Asmedia Technology on November 6, 2024 and sell it today you would lose (5,500) from holding Asmedia Technology or give up 2.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Asmedia Technology  vs.  Simplo Technology Co

 Performance 
       Timeline  
Asmedia Technology 

Risk-Adjusted Performance

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Weak
 
Strong
OK
Over the last 90 days Asmedia Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Asmedia Technology showed solid returns over the last few months and may actually be approaching a breakup point.
Simplo Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Insignificant
Over the last 90 days Simplo Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Simplo Technology may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Asmedia Technology and Simplo Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Asmedia Technology and Simplo Technology

The main advantage of trading using opposite Asmedia Technology and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asmedia Technology position performs unexpectedly, Simplo 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 Simplo Technology will offset losses from the drop in Simplo Technology's long position.
The idea behind Asmedia Technology and Simplo Technology Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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