Correlation Between Andean Silver and AiMedia Technologies

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

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

Diversification Opportunities for Andean Silver and AiMedia Technologies

-0.67

Correlation Coefficient

Andean Silver  AiMedia Technologies

Excellent diversification

The 3 months correlation between Andean and AiMedia is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Andean Silver Limited and AiMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiMedia Technologies and Andean Silver 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 Andean Silver Limited are associated (or correlated) with AiMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiMedia Technologies has no effect on the direction of Andean Silver i.e., Andean Silver and AiMedia Technologies go up and down completely randomly.

Pair Corralation between Andean Silver and AiMedia Technologies

Assuming the 90 days trading horizon Andean Silver Limited is expected to generate 0.96 times more return on investment than AiMedia Technologies. However, Andean Silver Limited is 1.04 times less risky than AiMedia Technologies. It trades about 0.16 of its potential returns per unit of risk. AiMedia Technologies is currently generating about -0.03 per unit of risk. If you would invest  83.00  in Andean Silver Limited on December 23, 2024 and sell it today you would earn a total of  40.00  from holding Andean Silver Limited or generate 48.19% return on investment over 90 days.

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

Andean Silver Limited  vs.  AiMedia Technologies

Andean Silver Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andean Silver Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Andean Silver unveiled solid returns over the last few months and may actually be approaching a breakup point.

AiMedia Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days AiMedia Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Andean Silver and AiMedia Technologies

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

The idea behind Andean Silver Limited and AiMedia 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.