Correlation Between Chenming Mold and AVerMedia Technologies

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

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

Diversification Opportunities for Chenming Mold and AVerMedia Technologies

-0.53

Correlation Coefficient

Chenming Mold  AVerMedia Technologies

Excellent diversification

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

Pair Corralation between Chenming Mold and AVerMedia Technologies

Assuming the 90 days trading horizon Chenming Mold is expected to generate 10.62 times less return on investment than AVerMedia Technologies. But when comparing it to its historical volatility, Chenming Mold Industrial is 1.2 times less risky than AVerMedia Technologies. It trades about 0.02 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,055  in AVerMedia Technologies on October 6, 2024 and sell it today you would earn a total of  635.00  from holding AVerMedia Technologies or generate 15.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Chenming Mold Industrial  vs.  AVerMedia Technologies

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.

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.

Pair Trading with Chenming Mold and AVerMedia Technologies

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

The idea behind Chenming Mold Industrial and AVerMedia Technologies 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.