Correlation Between Aspeed Technology and Chroma ATE

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

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

Diversification Opportunities for Aspeed Technology and Chroma ATE

-0.32

Correlation Coefficient

Aspeed Technology  Chroma ATE

Very good diversification

The 3 months correlation between Aspeed and Chroma is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and Chroma ATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chroma ATE and Aspeed 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 Aspeed Technology are associated (or correlated) with Chroma ATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chroma ATE has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and Chroma ATE go up and down completely randomly.

Pair Corralation between Aspeed Technology and Chroma ATE

Assuming the 90 days trading horizon Aspeed Technology is expected to under-perform the Chroma ATE. In addition to that, Aspeed Technology is 1.1 times more volatile than Chroma ATE. It trades about -0.03 of its total potential returns per unit of risk. Chroma ATE is currently generating about 0.06 per unit of volatility. If you would invest  37,550  in Chroma ATE on September 16, 2024 and sell it today you would earn a total of  2,950  from holding Chroma ATE or generate 7.86% return on investment over 90 days.

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

Aspeed Technology  vs.  Chroma ATE

Aspeed Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspeed Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Chroma ATE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chroma ATE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chroma ATE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aspeed Technology and Chroma ATE

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

The idea behind Aspeed Technology and Chroma ATE 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.