Correlation Between AVerMedia Technologies and Shuang Bang

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

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

Diversification Opportunities for AVerMedia Technologies and Shuang Bang

0.31

Correlation Coefficient

AVerMedia Technologies  Shuang Bang

Weak diversification

The 3 months correlation between AVerMedia and Shuang is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Shuang Bang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shuang Bang 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 Shuang Bang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shuang Bang Industrial has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Shuang Bang go up and down completely randomly.

Pair Corralation between AVerMedia Technologies and Shuang Bang

Assuming the 90 days trading horizon AVerMedia Technologies is expected to under-perform the Shuang Bang. In addition to that, AVerMedia Technologies is 3.01 times more volatile than Shuang Bang Industrial. It trades about -0.01 of its total potential returns per unit of risk. Shuang Bang Industrial is currently generating about 0.01 per unit of volatility. If you would invest  1,710  in Shuang Bang Industrial on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Shuang Bang Industrial or generate 0.0% return on investment over 90 days.

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

AVerMedia Technologies  vs.  Shuang Bang Industrial

AVerMedia Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVerMedia Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, AVerMedia Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shuang Bang Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shuang Bang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shuang Bang is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AVerMedia Technologies and Shuang Bang

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

The idea behind AVerMedia Technologies and Shuang Bang 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.