Correlation Between Aspeed Technology and Elite Material

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

By analyzing existing cross correlation between Aspeed Technology and Elite Material Co, you can compare the effects of market volatilities on Aspeed Technology and Elite Material 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 Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspeed Technology and Elite Material.

Diversification Opportunities for Aspeed Technology and Elite Material

-0.23

Correlation Coefficient

Aspeed Technology  Elite Material

Very good diversification

The 3 months correlation between Aspeed and Elite is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material 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 Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and Elite Material go up and down completely randomly.

Pair Corralation between Aspeed Technology and Elite Material

Assuming the 90 days trading horizon Aspeed Technology is expected to under-perform the Elite Material. In addition to that, Aspeed Technology is 1.12 times more volatile than Elite Material Co. It trades about -0.07 of its total potential returns per unit of risk. Elite Material Co is currently generating about 0.1 per unit of volatility. If you would invest  52,700  in Elite Material Co on December 5, 2024 and sell it today you would earn a total of  7,700  from holding Elite Material Co or generate 14.61% 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.  Elite Material Co

Aspeed Technology

Risk-Adjusted Performance

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Elite Material

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Material Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Elite Material showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspeed Technology and Elite Material

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

The idea behind Aspeed Technology and Elite Material Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.