Correlation Between GlobalWafers and Averlogic Technologies
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Averlogic Technologies 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 GlobalWafers and Averlogic Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and Averlogic Technologies, you can compare the effects of market volatilities on GlobalWafers and Averlogic Technologies 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 GlobalWafers with a short position of Averlogic Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Averlogic Technologies.
Diversification Opportunities for GlobalWafers and Averlogic Technologies
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlobalWafers and Averlogic is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Averlogic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Averlogic Technologies and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Averlogic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Averlogic Technologies has no effect on the direction of GlobalWafers i.e., GlobalWafers and Averlogic Technologies go up and down completely randomly.
Pair Corralation between GlobalWafers and Averlogic Technologies
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Averlogic Technologies. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 1.81 times less risky than Averlogic Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Averlogic Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,982 in Averlogic Technologies on November 27, 2024 and sell it today you would earn a total of 2,218 from holding Averlogic Technologies or generate 111.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. Averlogic Technologies
Performance |
| Timeline |
| GlobalWafers |
| Averlogic Technologies |
GlobalWafers and Averlogic Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and Averlogic Technologies
The main advantage of trading using opposite GlobalWafers and Averlogic Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Averlogic Technologies 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 Averlogic Technologies will offset losses from the drop in Averlogic Technologies' long position.| GlobalWafers vs. WIN Semiconductors | GlobalWafers vs. Sino American Silicon Products | GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Yageo Corp |
| Averlogic Technologies vs. FarGlory Hotel Co | Averlogic Technologies vs. Ibase Gaming | Averlogic Technologies vs. Li Kang Biomedical | Averlogic Technologies vs. Easywell Biomedicals |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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