Correlation Between BRIM Biotechnology and Asmedia Technology
Can any of the company-specific risk be diversified away by investing in both BRIM Biotechnology 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 BRIM Biotechnology and Asmedia Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIM Biotechnology and Asmedia Technology, you can compare the effects of market volatilities on BRIM Biotechnology 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 BRIM Biotechnology with a short position of Asmedia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIM Biotechnology and Asmedia Technology.
Diversification Opportunities for BRIM Biotechnology and Asmedia Technology
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between BRIM and Asmedia is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BRIM Biotechnology and Asmedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asmedia Technology and BRIM Biotechnology 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 BRIM Biotechnology 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 BRIM Biotechnology i.e., BRIM Biotechnology and Asmedia Technology go up and down completely randomly.
Pair Corralation between BRIM Biotechnology and Asmedia Technology
Assuming the 90 days trading horizon BRIM Biotechnology is expected to under-perform the Asmedia Technology. But the stock apears to be less risky and, when comparing its historical volatility, BRIM Biotechnology is 2.06 times less risky than Asmedia Technology. The stock trades about -0.27 of its potential returns per unit of risk. The Asmedia Technology is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 163,000 in Asmedia Technology on August 31, 2024 and sell it today you would lose (7,000) from holding Asmedia Technology or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIM Biotechnology vs. Asmedia Technology
Performance |
| Timeline |
| BRIM Biotechnology |
| Asmedia Technology |
BRIM Biotechnology and Asmedia Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIM Biotechnology and Asmedia Technology
The main advantage of trading using opposite BRIM Biotechnology and Asmedia Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIM Biotechnology 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.| BRIM Biotechnology vs. Taiwan Semiconductor Manufacturing | BRIM Biotechnology vs. Hon Hai Precision | BRIM Biotechnology vs. MediaTek | BRIM Biotechnology 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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