Correlation Between Aspeed Technology and NEXCOM International

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

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

Diversification Opportunities for Aspeed Technology and NEXCOM International

0.0

Correlation Coefficient

Aspeed Technology  NEXCOM International

Pay attention - limited upside

The 3 months correlation between Aspeed and NEXCOM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and NEXCOM International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXCOM International 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 NEXCOM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXCOM International has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and NEXCOM International go up and down completely randomly.

Pair Corralation between Aspeed Technology and NEXCOM International

Assuming the 90 days trading horizon Aspeed Technology is expected to under-perform the NEXCOM International. But the stock apears to be less risky and, when comparing its historical volatility, Aspeed Technology is 1.33 times less risky than NEXCOM International. The stock trades about -0.03 of its potential returns per unit of risk. The NEXCOM International Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  5,910  in NEXCOM International Co on December 24, 2024 and sell it today you would earn a total of  3,100  from holding NEXCOM International Co or generate 52.45% return on investment over 90 days.

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

Aspeed Technology  vs.  NEXCOM International 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 fairly stable basic indicators, Aspeed Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NEXCOM International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEXCOM International Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NEXCOM International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspeed Technology and NEXCOM International

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

The idea behind Aspeed Technology and NEXCOM International 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.