Correlation Between Converge Information and Integrated Micro
Can any of the company-specific risk be diversified away by investing in both Converge Information and Integrated Micro 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 Converge Information and Integrated Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Converge Information Communications and Integrated Micro Electronics, you can compare the effects of market volatilities on Converge Information and Integrated Micro 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 Converge Information with a short position of Integrated Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Information and Integrated Micro.
Diversification Opportunities for Converge Information and Integrated Micro
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Converge and Integrated is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica and Integrated Micro Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Micro Ele and Converge Information 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 Converge Information Communications are associated (or correlated) with Integrated Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Micro Ele has no effect on the direction of Converge Information i.e., Converge Information and Integrated Micro go up and down completely randomly.
Pair Corralation between Converge Information and Integrated Micro
Assuming the 90 days trading horizon Converge Information Communications is expected to generate 0.97 times more return on investment than Integrated Micro. However, Converge Information Communications is 1.03 times less risky than Integrated Micro. It trades about -0.1 of its potential returns per unit of risk. Integrated Micro Electronics is currently generating about -0.13 per unit of risk. If you would invest 1,674 in Converge Information Communications on August 25, 2024 and sell it today you would lose (94.00) from holding Converge Information Communications or give up 5.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Converge Information Communica vs. Integrated Micro Electronics
Performance |
| Timeline |
| Converge Information |
| Integrated Micro Ele |
Converge Information and Integrated Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Converge Information and Integrated Micro
The main advantage of trading using opposite Converge Information and Integrated Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Information position performs unexpectedly, Integrated Micro 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 Integrated Micro will offset losses from the drop in Integrated Micro's long position.| Converge Information vs. Dito CME Holdings | Converge Information vs. Transpacific Broadband Group | Converge Information vs. Allhome Corp | Converge Information vs. Jollibee Foods Corp |
| Integrated Micro vs. Atlas Consolidated Mining | Integrated Micro vs. STI Education Systems | Integrated Micro vs. Converge Information Communications | Integrated Micro vs. Pacificonline Systems |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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