Correlation Between AV Tech and Promise Technology
Can any of the company-specific risk be diversified away by investing in both AV Tech and Promise 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 AV Tech and Promise Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AV Tech Corp and Promise Technology, you can compare the effects of market volatilities on AV Tech and Promise 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 AV Tech with a short position of Promise Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AV Tech and Promise Technology.
Diversification Opportunities for AV Tech and Promise Technology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 8072 and Promise is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AV Tech Corp and Promise Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promise Technology and AV Tech 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 AV Tech Corp are associated (or correlated) with Promise Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promise Technology has no effect on the direction of AV Tech i.e., AV Tech and Promise Technology go up and down completely randomly.
Pair Corralation between AV Tech and Promise Technology
Assuming the 90 days trading horizon AV Tech Corp is expected to generate 0.88 times more return on investment than Promise Technology. However, AV Tech Corp is 1.14 times less risky than Promise Technology. It trades about -0.2 of its potential returns per unit of risk. Promise Technology is currently generating about -0.36 per unit of risk. If you would invest 2,790 in AV Tech Corp on August 30, 2024 and sell it today you would lose (140.00) from holding AV Tech Corp or give up 5.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AV Tech Corp vs. Promise Technology
Performance |
| Timeline |
| AV Tech Corp |
| Promise Technology |
AV Tech and Promise Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AV Tech and Promise Technology
The main advantage of trading using opposite AV Tech and Promise Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AV Tech position performs unexpectedly, Promise 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 Promise Technology will offset losses from the drop in Promise Technology's long position.| AV Tech vs. AVerMedia Technologies | AV Tech vs. Zinwell | AV Tech vs. In Win Development | AV Tech vs. Chenming Mold Industrial |
| Promise Technology vs. Min Aik Technology | Promise Technology vs. Spirox Corp | Promise Technology vs. Chenming Mold Industrial | Promise Technology vs. Infortrend Technology |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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