Correlation Between Associated Industries and AV Tech
Can any of the company-specific risk be diversified away by investing in both Associated Industries and AV Tech 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 Associated Industries and AV Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Industries China and AV Tech Corp, you can compare the effects of market volatilities on Associated Industries and AV Tech 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 Associated Industries with a short position of AV Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Industries and AV Tech.
Diversification Opportunities for Associated Industries and AV Tech
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Associated and 8072 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Associated Industries China and AV Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AV Tech Corp and Associated Industries 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 Associated Industries China are associated (or correlated) with AV Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AV Tech Corp has no effect on the direction of Associated Industries i.e., Associated Industries and AV Tech go up and down completely randomly.
Pair Corralation between Associated Industries and AV Tech
Assuming the 90 days trading horizon Associated Industries China is expected to under-perform the AV Tech. But the stock apears to be less risky and, when comparing its historical volatility, Associated Industries China is 1.11 times less risky than AV Tech. The stock trades about -0.29 of its potential returns per unit of risk. The AV Tech Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 2,805 in AV Tech Corp on August 26, 2024 and sell it today you would lose (70.00) from holding AV Tech Corp or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Industries China vs. AV Tech Corp
Performance |
| Timeline |
| Associated Industries |
| AV Tech Corp |
Associated Industries and AV Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Industries and AV Tech
The main advantage of trading using opposite Associated Industries and AV Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Industries position performs unexpectedly, AV Tech 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 AV Tech will offset losses from the drop in AV Tech's long position.| Associated Industries vs. In Win Development | Associated Industries vs. Chenming Mold Industrial | Associated Industries vs. Min Aik Technology | Associated Industries vs. Promise Technology |
| AV Tech vs. Novatek Microelectronics Corp | AV Tech vs. Quanta Computer | AV Tech vs. United Microelectronics |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |