Correlation Between Astar and RF MICRO

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

By analyzing existing cross correlation between Astar and RF MICRO DEVICES, you can compare the effects of market volatilities on Astar and RF MICRO 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 Astar with a short position of RF MICRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and RF MICRO.

Diversification Opportunities for Astar and RF MICRO

-0.33

Correlation Coefficient

Astar  RF MICRO

Very good diversification

The 3 months correlation between Astar and RFM is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Astar and RF MICRO DEVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF MICRO DEVICES and Astar 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 Astar are associated (or correlated) with RF MICRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF MICRO DEVICES has no effect on the direction of Astar i.e., Astar and RF MICRO go up and down completely randomly.

Pair Corralation between Astar and RF MICRO

Assuming the 90 days trading horizon Astar is expected to generate 2.39 times more return on investment than RF MICRO. However, Astar is 2.39 times more volatile than RF MICRO DEVICES. It trades about 0.02 of its potential returns per unit of risk. RF MICRO DEVICES is currently generating about 0.05 per unit of risk. If you would invest  6.46  in Astar on October 26, 2024 and sell it today you would lose (1.22) from holding Astar or give up 18.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.08%
Values	Daily Returns

Astar  vs.  RF MICRO DEVICES

Astar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

RF MICRO DEVICES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RF MICRO DEVICES 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 Astar and RF MICRO

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

The idea behind Astar and RF MICRO DEVICES 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.