Correlation Between AVerMedia Technologies and Provision Information

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

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

Diversification Opportunities for AVerMedia Technologies and Provision Information

0.81

Correlation Coefficient

AVerMedia Technologies  Provision Information

Very poor diversification

The 3 months correlation between AVerMedia and Provision is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Provision Information go up and down completely randomly.

Pair Corralation between AVerMedia Technologies and Provision Information

Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 2.19 times more return on investment than Provision Information. However, AVerMedia Technologies is 2.19 times more volatile than Provision Information CoLtd. It trades about 0.05 of its potential returns per unit of risk. Provision Information CoLtd is currently generating about 0.1 per unit of risk. If you would invest  4,135  in AVerMedia Technologies on October 15, 2024 and sell it today you would earn a total of  300.00  from holding AVerMedia Technologies or generate 7.26% return on investment over 90 days.

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

AVerMedia Technologies  vs.  Provision Information CoLtd

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 February 2025.

Provision Information

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Provision Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AVerMedia Technologies and Provision Information

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

The idea behind AVerMedia Technologies and Provision Information CoLtd 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.