Correlation Between Aspeed Technology and RichWave Technology

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

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

Diversification Opportunities for Aspeed Technology and RichWave Technology

-0.37

Correlation Coefficient

Aspeed Technology  RichWave Technology

Very good diversification

The 3 months correlation between Aspeed and RichWave is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and RichWave Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RichWave Technology Corp 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 RichWave Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RichWave Technology Corp has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and RichWave Technology go up and down completely randomly.

Pair Corralation between Aspeed Technology and RichWave Technology

Assuming the 90 days trading horizon Aspeed Technology is expected to under-perform the RichWave Technology. But the stock apears to be less risky and, when comparing its historical volatility, Aspeed Technology is 1.01 times less risky than RichWave Technology. The stock trades about -0.03 of its potential returns per unit of risk. The RichWave Technology Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  22,200  in RichWave Technology Corp on October 22, 2024 and sell it today you would lose (3,350) from holding RichWave Technology Corp or give up 15.09% of portfolio value over 90 days.

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

Aspeed Technology  vs.  RichWave Technology Corp

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

RichWave Technology Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RichWave Technology Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, RichWave Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aspeed Technology and RichWave Technology

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

The idea behind Aspeed Technology and RichWave Technology Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.