Correlation Between Softstar Entertainment and AVer Information
Can any of the company-specific risk be diversified away by investing in both Softstar Entertainment and AVer Information 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 Softstar Entertainment and AVer Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softstar Entertainment and AVer Information, you can compare the effects of market volatilities on Softstar Entertainment and AVer Information 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 Softstar Entertainment with a short position of AVer Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softstar Entertainment and AVer Information.
Diversification Opportunities for Softstar Entertainment and AVer Information
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Softstar and AVer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Softstar Entertainment and AVer Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVer Information and Softstar Entertainment 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 Softstar Entertainment are associated (or correlated) with AVer Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVer Information has no effect on the direction of Softstar Entertainment i.e., Softstar Entertainment and AVer Information go up and down completely randomly.
Pair Corralation between Softstar Entertainment and AVer Information
Assuming the 90 days trading horizon Softstar Entertainment is expected to generate 1.27 times more return on investment than AVer Information. However, Softstar Entertainment is 1.27 times more volatile than AVer Information. It trades about -0.02 of its potential returns per unit of risk. AVer Information is currently generating about -0.03 per unit of risk. 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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softstar Entertainment vs. AVer Information
Performance |
| Timeline |
| Softstar Entertainment |
| AVer Information |
Softstar Entertainment and AVer Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softstar Entertainment and AVer Information
The main advantage of trading using opposite Softstar Entertainment and AVer Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softstar Entertainment position performs unexpectedly, AVer Information 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 AVer Information will offset losses from the drop in AVer Information's long position.| Softstar Entertainment vs. Hi Sharp Electronics | Softstar Entertainment vs. Standard Chemical Pharmaceutical | Softstar Entertainment vs. Sea Sonic Electronics | Softstar Entertainment vs. San Fu Chemical |
| AVer Information vs. Evergreen Steel Corp | AVer Information vs. Wei Chih Steel | AVer Information vs. Sheng Yu Steel | AVer Information vs. Tung Ho Steel |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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