Correlation Between Asia Vital and Information Technology
Can any of the company-specific risk be diversified away by investing in both Asia Vital and Information 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 Asia Vital and Information Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Vital Components and Information Technology Total, you can compare the effects of market volatilities on Asia Vital and Information 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 Asia Vital with a short position of Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Vital and Information Technology.
Diversification Opportunities for Asia Vital and Information Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asia and Information is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Asia Vital Components and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology and Asia Vital 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 Asia Vital Components are associated (or correlated) with Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Asia Vital i.e., Asia Vital and Information Technology go up and down completely randomly.
Pair Corralation between Asia Vital and Information Technology
Assuming the 90 days trading horizon Asia Vital is expected to generate 1.08 times less return on investment than Information Technology. In addition to that, Asia Vital is 1.34 times more volatile than Information Technology Total. It trades about 0.05 of its total potential returns per unit of risk. Information Technology Total is currently generating about 0.07 per unit of volatility. If you would invest 4,480 in Information Technology Total on September 19, 2024 and sell it today you would earn a total of 120.00 from holding Information Technology Total or generate 2.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Asia Vital Components vs. Information Technology Total
Performance |
Timeline |
Asia Vital Components |
Information Technology |
Asia Vital and Information Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asia Vital and Information Technology
The main advantage of trading using opposite Asia Vital and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Vital position performs unexpectedly, Information 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 Information Technology will offset losses from the drop in Information Technology's long position.Asia Vital vs. AU Optronics | Asia Vital vs. Innolux Corp | Asia Vital vs. Ruentex Development Co | Asia Vital vs. WiseChip Semiconductor |
Information Technology vs. Syscom Computer Engineering | Information Technology vs. Tatung System Technologies |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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