Correlation Between PlayNitride and Asmedia Technology
Can any of the company-specific risk be diversified away by investing in both PlayNitride and Asmedia 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 PlayNitride and Asmedia Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PlayNitride and Asmedia Technology, you can compare the effects of market volatilities on PlayNitride and Asmedia 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 PlayNitride with a short position of Asmedia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of PlayNitride and Asmedia Technology.
Diversification Opportunities for PlayNitride and Asmedia Technology
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PlayNitride and Asmedia is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PlayNitride and Asmedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asmedia Technology and PlayNitride 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 PlayNitride are associated (or correlated) with Asmedia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asmedia Technology has no effect on the direction of PlayNitride i.e., PlayNitride and Asmedia Technology go up and down completely randomly.
Pair Corralation between PlayNitride and Asmedia Technology
Assuming the 90 days trading horizon PlayNitride is expected to generate 1.35 times more return on investment than Asmedia Technology. However, PlayNitride is 1.35 times more volatile than Asmedia Technology. It trades about 0.24 of its potential returns per unit of risk. Asmedia Technology is currently generating about -0.02 per unit of risk. If you would invest 7,450 in PlayNitride on September 2, 2024 and sell it today you would earn a total of 6,600 from holding PlayNitride or generate 88.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PlayNitride vs. Asmedia Technology
Performance |
| Timeline |
| PlayNitride |
| Asmedia Technology |
PlayNitride and Asmedia Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PlayNitride and Asmedia Technology
The main advantage of trading using opposite PlayNitride and Asmedia Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PlayNitride position performs unexpectedly, Asmedia 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 Asmedia Technology will offset losses from the drop in Asmedia Technology's long position.| PlayNitride vs. Taiwan Semiconductor Manufacturing | PlayNitride vs. Hon Hai Precision | PlayNitride vs. MediaTek | PlayNitride vs. Chunghwa Telecom Co |
| Asmedia Technology vs. Alchip Technologies | Asmedia Technology vs. Aspeed Technology | Asmedia Technology vs. Silergy Corp | Asmedia Technology vs. Global Unichip Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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