Correlation Between COL Digital and Maxvision Technology

Can any of the company-specific risk be diversified away by investing in both COL Digital and Maxvision Technology 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 COL Digital and Maxvision Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for COL Digital and Maxvision Technology

0.52

Correlation Coefficient

COL Digital  Maxvision Technology

Very weak diversification

The 3 months correlation between COL and Maxvision is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding COL Digital Publishing and Maxvision Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxvision Technology Corp and COL Digital 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 COL Digital Publishing are associated (or correlated) with Maxvision Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxvision Technology Corp has no effect on the direction of COL Digital i.e., COL Digital and Maxvision Technology go up and down completely randomly.

Pair Corralation between COL Digital and Maxvision Technology

Assuming the 90 days trading horizon COL Digital Publishing is expected to under-perform the Maxvision Technology. But the stock apears to be less risky and, when comparing its historical volatility, COL Digital Publishing is 1.07 times less risky than Maxvision Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Maxvision Technology Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,413  in Maxvision Technology Corp on November 29, 2024 and sell it today you would earn a total of  753.00  from holding Maxvision Technology Corp or generate 31.21% return on investment over 90 days.

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

COL Digital Publishing  vs.  Maxvision Technology Corp

COL Digital Publishing

Risk-Adjusted Performance

Very Weak

Over the last 90 days COL Digital Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Maxvision Technology Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maxvision Technology Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maxvision Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COL Digital and Maxvision Technology

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

The idea behind COL Digital Publishing and Maxvision Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.