Correlation Between AVerMedia Technologies and Chenming Mold

Can any of the company-specific risk be diversified away by investing in both AVerMedia Technologies and Chenming Mold 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 AVerMedia Technologies and Chenming Mold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AVerMedia Technologies and Chenming Mold Industrial, you can compare the effects of market volatilities on AVerMedia Technologies and Chenming Mold 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 AVerMedia Technologies with a short position of Chenming Mold. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Chenming Mold.

Diversification Opportunities for AVerMedia Technologies and Chenming Mold

-0.53

Correlation Coefficient

AVerMedia Technologies  Chenming Mold

Excellent diversification

The 3 months correlation between AVerMedia and Chenming is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Chenming Mold Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chenming Mold Industrial and AVerMedia Technologies 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 AVerMedia Technologies are associated (or correlated) with Chenming Mold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chenming Mold Industrial has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Chenming Mold go up and down completely randomly.

Pair Corralation between AVerMedia Technologies and Chenming Mold

Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 1.72 times less return on investment than Chenming Mold. But when comparing it to its historical volatility, AVerMedia Technologies is 1.38 times less risky than Chenming Mold. It trades about 0.07 of its potential returns per unit of risk. Chenming Mold Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12,550  in Chenming Mold Industrial on October 6, 2024 and sell it today you would earn a total of  1,950  from holding Chenming Mold Industrial or generate 15.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

AVerMedia Technologies  vs.  Chenming Mold Industrial

AVerMedia Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AVerMedia Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AVerMedia Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chenming Mold Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chenming Mold Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chenming Mold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVerMedia Technologies and Chenming Mold

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

The idea behind AVerMedia Technologies and Chenming Mold Industrial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.