Correlation Between Asustek Computer and CviLux Corp

Can any of the company-specific risk be diversified away by investing in both Asustek Computer and CviLux Corp 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 Asustek Computer and CviLux Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asustek Computer and CviLux Corp, you can compare the effects of market volatilities on Asustek Computer and CviLux Corp 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 Asustek Computer with a short position of CviLux Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and CviLux Corp.

Diversification Opportunities for Asustek Computer and CviLux Corp

-0.23

Correlation Coefficient

Asustek Computer  CviLux Corp

Very good diversification

The 3 months correlation between Asustek and CviLux is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Asustek Computer and CviLux Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CviLux Corp and Asustek Computer 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 Asustek Computer are associated (or correlated) with CviLux Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CviLux Corp has no effect on the direction of Asustek Computer i.e., Asustek Computer and CviLux Corp go up and down completely randomly.

Pair Corralation between Asustek Computer and CviLux Corp

Assuming the 90 days trading horizon Asustek Computer is expected to generate 0.9 times more return on investment than CviLux Corp. However, Asustek Computer is 1.11 times less risky than CviLux Corp. It trades about 0.21 of its potential returns per unit of risk. CviLux Corp is currently generating about -0.02 per unit of risk. If you would invest  60,500  in Asustek Computer on October 11, 2024 and sell it today you would earn a total of  4,100  from holding Asustek Computer or generate 6.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Asustek Computer  vs.  CviLux Corp

Asustek Computer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asustek Computer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asustek Computer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CviLux Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CviLux Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Asustek Computer and CviLux Corp

The main advantage of trading using opposite Asustek Computer and CviLux Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asustek Computer position performs unexpectedly, CviLux Corp 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 CviLux Corp will offset losses from the drop in CviLux Corp's long position.

The idea behind Asustek Computer and CviLux Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.