Correlation Between Aiptek International and Max Zipper

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

By analyzing existing cross correlation between Aiptek International and Max Zipper Co, you can compare the effects of market volatilities on Aiptek International and Max Zipper 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 Aiptek International with a short position of Max Zipper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aiptek International and Max Zipper.

Diversification Opportunities for Aiptek International and Max Zipper

-0.46

Correlation Coefficient

Aiptek International  Max Zipper

Very good diversification

The 3 months correlation between Aiptek and Max is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aiptek International and Max Zipper Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Zipper and Aiptek International 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 Aiptek International are associated (or correlated) with Max Zipper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Zipper has no effect on the direction of Aiptek International i.e., Aiptek International and Max Zipper go up and down completely randomly.

Pair Corralation between Aiptek International and Max Zipper

Assuming the 90 days trading horizon Aiptek International is expected to generate 1.1 times less return on investment than Max Zipper. But when comparing it to its historical volatility, Aiptek International is 1.15 times less risky than Max Zipper. It trades about 0.05 of its potential returns per unit of risk. Max Zipper Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,500  in Max Zipper Co on October 4, 2024 and sell it today you would earn a total of  2,780  from holding Max Zipper Co or generate 42.77% return on investment over 90 days.

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

Aiptek International  vs.  Max Zipper Co

Aiptek International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aiptek International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aiptek International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Max Zipper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Max Zipper may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aiptek International and Max Zipper

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

The idea behind Aiptek International and Max Zipper 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.