Correlation Between I Jang and AVerMedia Technologies

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

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

Diversification Opportunities for I Jang and AVerMedia Technologies

0.5

Correlation Coefficient

I Jang  AVerMedia Technologies

Very weak diversification

The 3 months correlation between 8342 and AVerMedia is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding I Jang Industrial and AVerMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVerMedia Technologies and I Jang 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 I Jang Industrial 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 I Jang i.e., I Jang and AVerMedia Technologies go up and down completely randomly.

Pair Corralation between I Jang and AVerMedia Technologies

Assuming the 90 days trading horizon I Jang is expected to generate 1.24 times less return on investment than AVerMedia Technologies. But when comparing it to its historical volatility, I Jang Industrial is 1.33 times less risky than AVerMedia Technologies. It trades about 0.06 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,260  in AVerMedia Technologies on September 13, 2024 and sell it today you would earn a total of  2,035  from holding AVerMedia Technologies or generate 90.04% return on investment over 90 days.

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

I Jang Industrial  vs.  AVerMedia Technologies

I Jang Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

AVerMedia Technologies

Risk-Adjusted Performance

0 of 100

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 fairly stable basic indicators, AVerMedia Technologies 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 I Jang and AVerMedia Technologies

The main advantage of trading using opposite I Jang and AVerMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Jang 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 I Jang Industrial 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.