Correlation Between AVerMedia Technologies and Quanta Storage

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

By analyzing existing cross correlation between AVerMedia Technologies and Quanta Storage, you can compare the effects of market volatilities on AVerMedia Technologies and Quanta Storage 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 Quanta Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Quanta Storage.

Diversification Opportunities for AVerMedia Technologies and Quanta Storage

0.91

Correlation Coefficient

AVerMedia Technologies  Quanta Storage

Almost no diversification

The 3 months correlation between AVerMedia and Quanta is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Quanta Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Storage 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 Quanta Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Storage has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Quanta Storage go up and down completely randomly.

Pair Corralation between AVerMedia Technologies and Quanta Storage

Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 1.03 times more return on investment than Quanta Storage. However, AVerMedia Technologies is 1.03 times more volatile than Quanta Storage. It trades about 0.06 of its potential returns per unit of risk. Quanta Storage is currently generating about 0.06 per unit of risk. If you would invest  4,450  in AVerMedia Technologies on September 28, 2024 and sell it today you would earn a total of  315.00  from holding AVerMedia Technologies or generate 7.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AVerMedia Technologies  vs.  Quanta Storage

AVerMedia Technologies

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AVerMedia Technologies are ranked lower than 4 (%) 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 January 2025.

Quanta Storage

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Storage are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quanta Storage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AVerMedia Technologies and Quanta Storage

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

The idea behind AVerMedia Technologies and Quanta Storage 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.