Correlation Between Capital Income and AiMedia Technologies
Can any of the company-specific risk be diversified away by investing in both Capital Income and AiMedia 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 Capital Income and AiMedia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and AiMedia Technologies, you can compare the effects of market volatilities on Capital Income and AiMedia 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 Capital Income with a short position of AiMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and AiMedia Technologies.
Diversification Opportunities for Capital Income and AiMedia Technologies
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and AiMedia is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and AiMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiMedia Technologies and Capital Income 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 Capital Income Builder are associated (or correlated) with AiMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiMedia Technologies has no effect on the direction of Capital Income i.e., Capital Income and AiMedia Technologies go up and down completely randomly.
Pair Corralation between Capital Income and AiMedia Technologies
Assuming the 90 days horizon Capital Income is expected to generate 13.08 times less return on investment than AiMedia Technologies. But when comparing it to its historical volatility, Capital Income Builder is 7.75 times less risky than AiMedia Technologies. It trades about 0.07 of its potential returns per unit of risk. AiMedia Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 41.00 in AiMedia Technologies on November 3, 2024 and sell it today you would earn a total of 32.00 from holding AiMedia Technologies or generate 78.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Capital Income Builder vs. AiMedia Technologies
Performance |
| Timeline |
| Capital Income Builder |
| AiMedia Technologies |
Capital Income and AiMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and AiMedia Technologies
The main advantage of trading using opposite Capital Income and AiMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, AiMedia 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 AiMedia Technologies will offset losses from the drop in AiMedia Technologies' long position.| Capital Income vs. Blackrock Financial Institutions | Capital Income vs. Fidelity Advisor Financial | Capital Income vs. Blackstone Secured Lending | Capital Income vs. 1919 Financial Services |
| AiMedia Technologies vs. Air New Zealand | AiMedia Technologies vs. Lykos Metals | AiMedia Technologies vs. Truscott Mining Corp | AiMedia Technologies vs. Aeon Metals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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