Correlation Between Arbor Technology and Asmedia Technology

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

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

Diversification Opportunities for Arbor Technology and Asmedia Technology

0.71

Correlation Coefficient

Arbor Technology  Asmedia Technology

Poor diversification

The 3 months correlation between Arbor and Asmedia is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Technology and Asmedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asmedia Technology and Arbor Technology 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 Arbor Technology are associated (or correlated) with Asmedia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asmedia Technology has no effect on the direction of Arbor Technology i.e., Arbor Technology and Asmedia Technology go up and down completely randomly.

Pair Corralation between Arbor Technology and Asmedia Technology

Assuming the 90 days trading horizon Arbor Technology is expected to generate 1.15 times less return on investment than Asmedia Technology. In addition to that, Arbor Technology is 1.09 times more volatile than Asmedia Technology. It trades about 0.1 of its total potential returns per unit of risk. Asmedia Technology is currently generating about 0.13 per unit of volatility. If you would invest  164,500  in Asmedia Technology on December 3, 2024 and sell it today you would earn a total of  36,500  from holding Asmedia Technology or generate 22.19% return on investment over 90 days.

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

Arbor Technology  vs.  Asmedia Technology

Arbor Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Asmedia Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asmedia Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asmedia Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbor Technology and Asmedia Technology

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

The idea behind Arbor Technology and Asmedia Technology 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.