Correlation Between Aspeed Technology and Vivotek

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

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

Diversification Opportunities for Aspeed Technology and Vivotek

0.24

Correlation Coefficient

Aspeed Technology  Vivotek

Modest diversification

The 3 months correlation between Aspeed and Vivotek is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and Vivotek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivotek 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 Vivotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivotek has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and Vivotek go up and down completely randomly.

Pair Corralation between Aspeed Technology and Vivotek

Assuming the 90 days trading horizon Aspeed Technology is expected to under-perform the Vivotek. But the stock apears to be less risky and, when comparing its historical volatility, Aspeed Technology is 1.0 times less risky than Vivotek. The stock trades about -0.03 of its potential returns per unit of risk. The Vivotek is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  11,800  in Vivotek on December 24, 2024 and sell it today you would earn a total of  3,450  from holding Vivotek or generate 29.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.25%
Values	Daily Returns

Aspeed Technology  vs.  Vivotek

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 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.

Vivotek

Risk-Adjusted Performance

Good

Over the last 90 days Vivotek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Vivotek showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspeed Technology and Vivotek

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

The idea behind Aspeed Technology and Vivotek 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.