Correlation Between AV Tech and AVerMedia Technologies

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

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

Diversification Opportunities for AV Tech and AVerMedia Technologies

-0.29

Correlation Coefficient

AV Tech  AVerMedia Technologies

Very good diversification

The 3 months correlation between 8072 and AVerMedia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AV Tech Corp and AVerMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVerMedia Technologies and AV Tech 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 AV Tech Corp are associated (or correlated) with AVerMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVerMedia Technologies has no effect on the direction of AV Tech i.e., AV Tech and AVerMedia Technologies go up and down completely randomly.

Pair Corralation between AV Tech and AVerMedia Technologies

Assuming the 90 days trading horizon AV Tech Corp is expected to generate 0.73 times more return on investment than AVerMedia Technologies. However, AV Tech Corp is 1.38 times less risky than AVerMedia Technologies. It trades about 0.16 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about -0.07 per unit of risk. If you would invest  2,455  in AV Tech Corp on December 30, 2024 and sell it today you would earn a total of  510.00  from holding AV Tech Corp or generate 20.77% return on investment over 90 days.

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

AV Tech Corp  vs.  AVerMedia Technologies

AV Tech Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AV Tech Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AV Tech showed solid returns over the last few months and may actually be approaching a breakup point.

AVerMedia Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVerMedia Technologies 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.

Pair Trading with AV Tech and AVerMedia Technologies

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

The idea behind AV Tech Corp and AVerMedia Technologies 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 Anywhere module to track or share privately all of your investments from the convenience of any device.