Correlation Between Coretronic and AVY Precision
Can any of the company-specific risk be diversified away by investing in both Coretronic and AVY Precision 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 Coretronic and AVY Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coretronic and AVY Precision Technology, you can compare the effects of market volatilities on Coretronic and AVY Precision 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 Coretronic with a short position of AVY Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coretronic and AVY Precision.
Diversification Opportunities for Coretronic and AVY Precision
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coretronic and AVY is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Coretronic and AVY Precision Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVY Precision Technology and Coretronic 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 Coretronic are associated (or correlated) with AVY Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVY Precision Technology has no effect on the direction of Coretronic i.e., Coretronic and AVY Precision go up and down completely randomly.
Pair Corralation between Coretronic and AVY Precision
Assuming the 90 days trading horizon Coretronic is expected to under-perform the AVY Precision. But the stock apears to be less risky and, when comparing its historical volatility, Coretronic is 1.75 times less risky than AVY Precision. The stock trades about -0.17 of its potential returns per unit of risk. The AVY Precision Technology is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,560 in AVY Precision Technology on October 25, 2024 and sell it today you would lose (205.00) from holding AVY Precision Technology or give up 5.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coretronic vs. AVY Precision Technology
Performance |
| Timeline |
| Coretronic |
| AVY Precision Technology |
Coretronic and AVY Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coretronic and AVY Precision
The main advantage of trading using opposite Coretronic and AVY Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coretronic position performs unexpectedly, AVY Precision 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 AVY Precision will offset losses from the drop in AVY Precision's long position.| Coretronic vs. Qisda Corp | Coretronic vs. AU Optronics | Coretronic vs. Vanguard International Semiconductor | Coretronic vs. Lite On Technology Corp |
| AVY Precision vs. Ability Enterprise Co | AVY Precision vs. XAC Automation | AVY Precision vs. Cheng Fwa Industrial | AVY Precision vs. Kaulin Mfg |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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