Correlation Between Asia Optical and Welltend Technology
Can any of the company-specific risk be diversified away by investing in both Asia Optical and Welltend 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 Optical and Welltend Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Optical Co and Welltend Technology Corp, you can compare the effects of market volatilities on Asia Optical and Welltend 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 Optical with a short position of Welltend Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Optical and Welltend Technology.
Diversification Opportunities for Asia Optical and Welltend Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Asia and Welltend is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Asia Optical Co and Welltend Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltend Technology Corp and Asia Optical 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 Optical Co are associated (or correlated) with Welltend Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltend Technology Corp has no effect on the direction of Asia Optical i.e., Asia Optical and Welltend Technology go up and down completely randomly.
Pair Corralation between Asia Optical and Welltend Technology
Assuming the 90 days trading horizon Asia Optical Co is expected to generate 1.41 times more return on investment than Welltend Technology. However, Asia Optical is 1.41 times more volatile than Welltend Technology Corp. It trades about -0.07 of its potential returns per unit of risk. Welltend Technology Corp is currently generating about -0.13 per unit of risk. If you would invest 17,900 in Asia Optical Co on December 29, 2024 and sell it today you would lose (2,900) from holding Asia Optical Co or give up 16.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.25% |
Values | Daily Returns |
Asia Optical Co vs. Welltend Technology Corp
Performance |
Timeline |
Asia Optical |
Welltend Technology Corp |
Asia Optical and Welltend Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asia Optical and Welltend Technology
The main advantage of trading using opposite Asia Optical and Welltend Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Optical position performs unexpectedly, Welltend 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 Welltend Technology will offset losses from the drop in Welltend Technology's long position.Asia Optical vs. LARGAN Precision Co | Asia Optical vs. Novatek Microelectronics Corp | Asia Optical vs. Genius Electronic Optical | Asia Optical vs. Catcher Technology Co |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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